How to Finance a Car

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Make sure you get the best possible terms on your car loan by doing your homework.

To complete this How-To you will need:

Your credit rating
A pre-approved car loan
Math skills
On-time payments
A down payment (optional)

Step 1: Get your credit rating

Request a copy of your credit report by logging onto annualcreditreport.com or by calling 1-877-322-8228. You are entitled to one free copy per year. Car loans are based on your credit rating, so make sure there are no mistakes.

Tip: Try to scrape together a down payment of at least 15 percent, which will greatly reduce your financing costs.

Step 2: Shop before you shop

Once you figure out how much you can afford to spend on a monthly payment, and before you set foot on a car lot, get a bank or credit union to pre-approve you for a car loan.

Tip: Search online for sites that compare current auto-loan rates.

Step 3: Focus on the APR

When comparing loans, focus on the APR—annual percentage rate—rather than the monthly payment. It's more important to have a low interest rate, as long as you can make the payment each month.

Tip: Resist the temptation to finance a car for longer than 48 months. You'll be paying so much in interest that if the car is stolen or wrecked, you run the risk of owing more than the car is worth.

Step 4: Play let's make a deal

Head to the dealership. Tell them you're pre-approved for a car loan, and ask them if they can offer you a better financing deal than the one you've secured already.

Step 5: Do the math

Always crunch the numbers before agreeing to a financing plan. If the dealer offers you a choice of either zero-percent financing or a cash rebate, do the math to figure out which is the better deal.

Step 6: Pay on time

Make your payments on time. Late payments lead to late fees, which will affect your credit rating.

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Category:

Autos & Vehicles

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[JustaEropeanGuy]

How to finance a car - have money! If you don't - SAVE!!! Stop this credit crap! America is in enough trouble!

[vraciudude]

howcast needs to make a "how ti wipe your ass" video

[FromThe3PointLine]

agreed, very true

[quazz1mott0]

If you cant afford to pay cash for a $20K cash one for $2K.

[OwnageOnYT]

Go credit!!! no really just save some moeny dont loan!

[johnseoulkr]

Financing is stupid. If you cant pay cash, then you can't afford it. People are just too scared to save and wait for what they want.

[ChrisSenft]

hey bglad4life, what's the difference in making 0% interest on a 3 year loan, (most dealers offer 0% on 1 year old models still left on the lot just to get rid of them quick) or paying cash that you saved for the same amount of time??! "DUH!!!!"

[BethsKissForYou]

annualcreditreport . com?

but free credit report has the cool song =[

[Jerkwaad]

second