So, you have made the decision to purchase a car. And you of course need some sort of financing in order to make it happen, especially if you are looking to buy a new car or a gently–used one from a dealership. In such cases, most of the time, the options and advice can be endless, and overwhelming. So, knowing some of the common traps that one can fall into, and avoiding them, as well as learning tips and tricks to get the best possible car financing based on your credit score, chosen car make and model, and financing agency are essential.

For starters, be prepared. Do your research – not just the vintage, make and model of the car, but also your credit history, the type and amount of loan you are likely eligible for, and which kind of financial institution makes the most sense for your need. Is it your bank, the local credit union, or perhaps an online car financing company or auto loan agency, or is going with your dealership the best? Next, be prepared to negotiate the price and terms, and work towards making the best possible deal for yourself, especially when you’re working with a dealership. A zero interest deal if offered, may actually be taking away from other savings – you have to do the math and not get carried away by something. Arm yourself – the car salesman and the finance manager will try to scare or entice you into choosing extras or a more expensive plan – obviously that’s where the profit and additional sales lies, for them.

Stay firm, and don’t fall for high interest loans, because they will just make the worth of your purchase lower in the long run, and lead to heartache. Keep the terms short – the longer your loan is for, the most you will be paying out in the long run. Sure, you pay less when you stretch the loan out for a number of years, and your auto dealer will make that seem enticing. However, it would behoove you to stick to no more than 5 years, even if they offer you up to 7 years to pay off the loan. And of course, optimal would be a 3 year span. Also, if you can manage a bigger down payment, do it. Better to stretch a little at the beginning than end up paying out so much more in interest over the years.