| 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. |
