Score The Best Auto Loan Rate To Finance Your Car Purchase

What Are the Keys to Better Car-Buying Deals?

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Buying a car can be a gas! The sense of accomplishment you feel, the pride you take in your "new wheels," and the joys of the open road can be pretty exciting. But just as it is with any big-ticket purchase, car loans and car financing are more about what you can afford and how you can get the best deal possible. Buying a car should be fun, sure, but the steps you have to take to get ready for the actual purchase are the real keys to eventually making your motor run.

Once I decide to buy a car, what should I focus on?

Before you do anything else, develop an overall research strategy along the lines of the following steps:

  1. Make a master list of phone calls, especially calls to car loan and car financing companies. If you're like most people, you'll need to use a payment plan. So make sure that you have a solid list of potential auto loan companies before determining how much you can spend.
  2. Plan trips to car dealerships. "Window shopping" for cars can be fun, but it's also very necessary. And if you belong to any auto associations (like AAA or USAA), are a member of a union, or even if you're a veteran, pay close attention to all auto advertisements. Some car dealerships may give you a price break based on such affiliations.
  3. Read auto publications, including specific safety inspection records and the like for the makes and models of your choice.
  4. Search for a car online. People use the Internet to buy so many different goods and services; why not cars? When buying a new or used vehicle, think of the Internet as one big online showroom. Sites like www.bargain.com offer hundreds of thousands of car-buying opportunities across the country, along with tips and advice on how to negotiate with sellers and how to apply for loans.

How much can I afford to spend on a new car?

Your credit history and your credit score will largely determine how much you can borrow. In fact, all aspects of your car loan — your interest rate, the time it will take for the loan to be authorized and all the other "red tape" you'll deal with — are directly related to your overall credit status. The same goes for any luxury item you buy — especially a house or apartment. Basically, the higher your credit score, the better deal you can get — on anything. So before you start planning to buy that "dream machine," understand that the information in your credit report will directly affect your car loans as well as your overall car-buying power.

How can I best determine car-buying options? Are there any online tools available?

Any reputable car dealership can help you create a payment plan that works for you. That's why car financing companies exist. But in today's information age, there are also auto loan calculators available online. As long as you know the specifics of your car loan — your interest rate and other auto-related financials (like your down payment and the overall life of the loan) — auto loan calculators are all over the Internet.

What happens if my credit isn't good? Do "bad credit car loans" exist?

Your credit score will vary over time, but if your credit score dips below 600, your chances of getting a low auto loan rate could be compromised. While you should try to avoid credit problems whenever possible, the good news is that you can still usually get a car loan even if you've had credit difficulties.

Before you start imagining how great your new car will look (and even more, how great you'll look driving it), do your homework and overall research. Make your calls, visit showrooms and independent car owners, and compare car prices. And remember to keep your overall financial picture in mind before you get ready to buy. Do that, and the journey to both financial stability and that car of your dreams may just be a short drive away.

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