Mon, Aug 29, 2011 Posted by Lawrence

Prior to going out and purchasing a car, whether you have good or bad credit, there are several factors you should keep in mind.  First, establish a limit on what you are going to spend on the car.  Either a set dollar amount for the entire purchase price or an amount you can comfortably afford to pay each month.  In order to do this you have to be aware of all of your monthly expenses and obligations.  You probably know off-hand what you are paid after taxes and deductions but gather all of your monthly bills and subtract them from your monthly paychecks.  What is left is the range you have for a car payment.

Know your credit history and credit score.  Even if you think you do know, maybe you checked last year, check again before applying for a car loan.  You might see an account on your credit report for which you owe just a few hundred dollars.  Try to pay that off so when the lender runs your credit that account will show as paid.  You will also have the opportunity to see if there are any mistakes on your credit report.  If there are mistakes, write to the credit bureaus and ask them to correct it.

Go to a variety of online banks and auto lenders and learn what available APR’s (annual percentage rates) are available.  Refresh yourself on all of the phrases and lingo you will read about in auto financing and what dealers will talk about while drawing up the contract.  Phrases such as APR, fixed-rate and variable-rate, financing on and off-site, and down payment can all be looked up online.  Also, be sure to remember purchasing and leasing a car is not the same thing.

Once familiar with all of the above terms then you are ready to apply online for a car loan.  After you are approved for the loan you will be off to the dealerships to select a car.  When you arrive do not forget to not go over the budget you have either set for yourself or for which you have been pre-approved.  Be aware off all the things dealers will try and add onto a sales contract that is not required for the loan.  Extended warranties are a good example.  Always attempt to negotiate or haggle on the total price of the vehicle and loan conditions.  Read over the entire sales contract.  Once you sign the contract it cannot be changed.

All of these techniques will place you in an advantage when purchasing a car to get a better loan and successfully pay off your car!