| Step: |
What to
Do: |
| |
1 |
Shop
around for auto financing before going to the dealer. Get pre-approved
for a loan. |
| |
2 |
Compare
APRs from local banks, thrifts, and credit unions, websites, and
newspapers. |
| |
3 |
Order a
copy of your credit report and correct any errors a few months before
shopping for a car. |
| |
4 |
Make the
largest downpayment that you can. Beware of a low downpayment or long
repayment plans. The more you borrow and the longer you take to pay the
loan, the more interest you pay and the more your car will cost you in
the end. Additionally, if you have to sell your car in the first few
years, you could owe the lender more than the car is worth. |
| |
5 |
Consider
paying for the tags, title search, and taxes separately, rather than
financing them. This can reduce the amount of interest that you will
pay. |
| |
6 |
If you
are going to apply for a loan at the dealership, make sure you first
negotiate the best price on the car. Beware of dealers who insist on
asking you how much you can afford every month. These dealers might be
interested in making you stretch out the term of the loan to make the
loan sound more affordable. However, by extending the length of the
loan, your total cost will increase. |
| |
7 |
Be aware
of penalties. Some lenders might charge you for paying off your loan
early.
|
| |
8 |
If you
need to give the dealer a deposit, make sure you know whether you will
get the money back if you change your mind. It is best to get this in
writing. |
| |
9 |
Service
contracts, credit insurance, extended warranties, and other options are
not required and can be costly over the term of the loan. |
| |
10 |
Be wary
of ads that promise loans for people with bad credit. These deals often
require a higher downpayment or have a very high APR. |
