If you decide to apply for a car loan at an automotive dealership, there are some things you should do to make sure you get the best rates for yourself. Here are some tips to help you work with dealers:

Make sure you negotiate the best price for the car first. Beware of dealers who insist on asking you how much you can afford each month. They may be trying to make the loan sound more affordable by stretching out the term of the loan.

However, the longer it takes you to pay off the loan, the more interest you will pay, and the more your total cost will increase.

Be aware of any penalties. Some lenders might charge you extra money for paying off the loan ahead of your payment schedule.

If a deposit is required, be sure you can get the money back if you change your mind. It’s a good idea to get this in writing to protect your deposit.

Don’t let the dealer talk you into service contracts, credit insurance, extended warranties, or other additional costs if you don’t want them. They are not required, and they can become costly over the length of the loan.

Be aware of ads that promise loans to people with bad credit. These ads often represent deals which require a higher down payment or which carry an extremely high APR.

In order to ensure you get the best price for your car, follow these steps:

  1. Shop around for auto financing before going to the dealer. Get pre-approved for a car loan.
  2. Compare APRs from local banks, thrifts, and credit unions, websites, and newspapers.
  3. Order a copy of your credit report and correct any errors a few months before shopping for a car.
  4. Make the largest down payment that you can. Beware of a low down payment or long repayment plans. The more you borrow and the longer you take to pay the loan, the more interest you pay and the more your car will cost you in the end. Additionally, if you have to sell your car in the first few years, you could owe the lender more than the car is worth.
  5. Consider paying for the tags, title search, and taxes separately, rather than financing them. This can reduce the amount of interest that you will pay.
  6. If you are going to apply for a loan at the dealership, make sure you first negotiate the best price on the car. Beware of dealers who insist on asking you how much you can afford every month. These dealers might be interested in making you stretch out the term of the loan to make the loan sound more affordable. However, by extending the length of the loan, your total cost will increase.
  7. Be aware of penalties. Some lenders might charge you for paying off your loan early.
  8. If you need to give the dealer a deposit, make sure you know whether you will get the money back if you change your mind. It is best to get this in writing.
  9. Service contracts, credit insurance, extended warranties, and other options are not required and can be costly over the term of the loan.

Be wary of ads that promise loans for people with bad credit. These deals often require a higher down payment or have a very high APR.

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