Car Financing Tips

To get the best financing available for your next car purchase, you've got to be on top of your game. Remember that you are dealing with people who do this every day, who live the business, and who make their living by making money off of you. Go in armed with the right information and they'll know right away that you're not one who is easily fooled into agreeing to high interest rates on your auto loan.

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Top Ten Car Financing Tips:

• Determine how much you can afford to pay before you buy. Don't forget to factor in other car costs like insurance, gas, maintenance and repair, et cetera.
  
• Prepare a substantial down payment of at least 20 percent of the total cost to minimize the total amount of your car loan.
  
• Know your credit score before you go to the dealer and have a copy of your credit reports—all three of them—to prove it if necessary.
  
• Get pre-approved for financing before going to the dealer. This gives you the upper hand in the negotiations.
  
• Check for late payment penalties or penalties for paying off the car early before you sign. Also, make sure that everything the sales person promised during negotiations is included in the contract.
  

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• Trying to pay for the car outright—in cash. Paying as much as you can upfront will make the overall cost of the car loan much cheaper because the number of payments and length of the loan will be significantly fewer.
  
• Remember the APR, and don't just look at the interest rate. Both of these will affect the overall cost of your car loan.
  
• Look into co-signing if necessary, especially if it will help you get a lower interest rate.
  
• Remember: Nothing is final until it is in writing—and signed.
  
• Go online and apply for your car loan through an online lender before you do anything else. Online auto lenders have partnerships with thousands of lenders who all want your business. You will find the most inexpensive loans with the best rates here, rather than with a car dealership, which only has a handful of contacts or a bank that is more interested in making money than finding you the best auto loan possible.

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