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Shopping for a Car Loan

Long before you decide what the make and model your next vehicle will be, you need to begin shopping for a car loan that will complement your budget while helping you to bring home a fabulous new car. There are many considerations that you need to take into account while deciding on how to finance your new vehicle, including the state of your credit, the cost of the vehicle you want to purchase, the amount you can afford to add to your monthly budget and the length of time you want to be locked into a loan. Using the power of the internet as your greatest resource, you can work your way through these and other considerations, and drive away in the car of your dreams.

When you begin shopping for a car loan, first examine your own credit history, and evaluate yourself in the same way a finance company will. Do you have excellent credit, making you a healthy risk for whichever company secures your loan? Alternatively, is your credit history spotty - or nonexistent - making you a poor risk for a creditor? By honestly evaluating your own creditworthiness, youíll be better prepared for what kind of financing you can expect to achieve.

Next, youíll need to examine your monthly budget - what is your income versus your debts? How much of a car payment can you afford to add to what youíre already making payments on each month? Car financing companies often include calculators on their websites, to help you figure out, using the purchase price of your vehicle and anticipated rate of interest, what your resulting monthly payment would be. Using those online calculators can help you to make a quick reality check on what types of vehicles you can set your sights on. When you are examining your budget, also consider whether youíll trade-in another vehicle to make your new purchase, how much that trade-in will be worth and how much money you have on hand to use as a down payment.

Now that youíve evaluated your own credit history and what you can afford, think about what kind of car you want to buy. Depending on what manufacturer you are interested in choosing, they may be offering deals in financing that can help you get into the car you want. But never let your choice of manufacturer dictate your financing! While it may seem that a specific manufacturer or car dealer is offering a deal that just canít be beat, there are often hidden costs or contingencies that you may not be anticipating. Consider that a car dealership will often negate rebates or loyalty programs by taken a half or one percent off the interest rate of your loan. While this will save you interest paid, it may greatly increase the cost of the vehicle you are purchasing, and adding significant amounts to the portion of the purchase price you finance. In the end, this means that youíve not saved any money at all!

You will want to fairly evaluate all of your financing options, including manufacturer or dealer financing. Do not go to a dealership to buy your new vehicle without being prepared to play hardball on financing. Be honest. Tell your car salesman that youíve done your homework, and based on your financing, what your expectations are. If you are definitely prepared to move forward and are confident of which financing organization will offer you the best terms, apply for pre-approval before even going to your car dealership. It often helps to have your pre-approval letter on hand. This can give you leverage on pricing, and make your car salesman work twice as hard to secure more favorable terms of financing for your purchase through the dealership or manufacturer. Most importantly, never make snap decisions when it comes to financing. Any reputable organization will not expect an immediate decision. Research all of your options, taking advantage of the resources the internet can provide. The decision you make will make the process of shopping for your car loan pleasant and profitable.

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