Find Good Car Financing

Before you begin car shopping, you should also research what car is suitable for both your needs and your budget.  You aren’t ready to actually begin looking at cars until you are armed with this information. 

Check with your bank or credit union to see what kind of car financing they can offer you.  Often, this is a much cheaper way to finance a car than through a dealership.

If you do finance through a dealer:

• Don’t drive the car off the lot unless you have a signed contract for financing.  This will prevent you from falling into the “Yo-Yo” sale trap, where you think you have bought the car, only to be called by the dealer a few days later, who will claim that the financing has fallen through.  You will then be asked to buy the car under new, much worse terms.

• Keep the car price negotiations separate from the financing.

• Avoid useless add-on products like credit life insurance, auto club memberships, GAP Insurance, or a service contract that doesn’t provide good coverage.

• Have any car inspected by a qualified mechanic before you buy it.

Questions to Ask

When you’re shopping for a car loan from a bank, credit union, or a dealership, ask these questions to make sure you’re getting a good deal:

1. What is the total amount of the loan?

2. What is the annual percentage rate (APR)?

3. What is the loan term (how long is the loan for)?

4. What is the monthly payment?  Is it low because the loan term is long, meaning you’ll pay more in interest over the life of the loan?  

5. How much in interest will you pay over the life of the loan?

6. What is the source of the financing?  Is the dealer who sold the car providing the financing?  Is it coming from a financing company?

7. What fees are attached to the sale?  There should be no more than a small document preparation fee, if anything.