Tips for Financing and Buying a Car

While it can be an exciting time – buying a new car – if not managed properly, the excitement can quickly turn into a nightmare worthy of repeating to your grandchildren someday. In order to avoid making some of the most common mistakes when shopping for and financing a new car, keep some of these tips in mind before you start and during the entire process:

Don't rely on dealer financing

While most Americans tend to rely on dealer financing for their vehicle, they don't realize how expensive this idea is. Dealer financing tends to be much more expensive than if you had simply arranged to get prequalified for a loan through InAutoLoans.com. This is because dealerships receive offers for financing from the lenders in the same way that you could have done on your own, only they feel that they then have to add some "padding" to that financing offer in order to compensate them for their time and trouble. As a result, if the bank sends the dealer a 60 month, 7.2% APR, what you will likely see presented to you is something more along the lines of an 8.0% APR. This can cost you hundreds or thousands of dollars over the life of your loan.

Getting pre-approved for your auto loan before you set foot anywhere near a dealership is critical to making sure you get the absolute best rates that your credit can land for you. In addition to getting the lower rate without the dealer adding in their padding, having pre-approval for your auto loan in hand is a negotiating bonus in your favor.

Shop for your vehicle online

Even if you don't plan on buying your vehicle through an online dealership, researching the car(s) you are interested in before going out to actually buy it is another way you can save plenty of money. Knowing the color you want the accessories you want and the price that you should be paying for all of this is key to negotiating a fair price with the salesperson that will help to eliminate buyer's remorse. With a loan pre-approval in hand you can know exactly what you are capable of affording and how many features you can add to the vehicle of your choice.

Negotiate and be happy or walk

Since you've researched the car and its features in advance, you know how much it is worth. When negotiating at the dealership for the vehicle, don't let them bully you into paying more than you know the car is worth retail. If the salesperson refuses to come even close to the price you've established, whether you are in Gary or Indianapolis, there are other dealerships that will be happy to work with you to find a better price.

Get insurance in advance

Since you know what car you're interested in, call your auto insurance company and get a quote for full coverage for your vehicle before you purchase it. Knowing in advance how much your new insurance rates are going to be will help you to be better prepared financially for the changes that your new auto is going to bring into your life.