One For The Money: Financing Your Car
How much could you save?

Are you thinking about how you're going to pay for your first car? You could get it:

But what if none of these options are open to you?

You could get a loan. Here's how:

Step one: Save for a down payment

It's possible to finance 100% of a vehicle purchase. But why not save money in the long run by making a down payment?

When you make a down payment, you need to borrow less. This means your monthly payment decreases, along with the total amount you pay in interest charges on your loan.

Step two: Find a co-signer

When you have a co-signer the loan is in your name.

Usually, if you are younger than 18, you will need to have a co-signer for the loan.

Even if you are 18 or older, some lenders require a co-signer, especially for borrowers with little credit history. Each credit union sets their own standards for granting loans.

A co-signer is someone who agrees to pay back the loan if you don't.

Not just anyone will be willing to do this for you. Often, a parent or an older sibling will. You have a serious obligation to your co-signer to pay the loan in full and to make all payments on time.

If you can't find anyone to co-sign the loan, the lender will consider it a signal of potential risk and might not be willing to grant the loan.

Should you take the rebate or the dealer-financed low interest rate?

Step three: Get the best loan

Put yourself in a strong position by:
Arranging your financing in advance is like having the money in your pocket when you go car shopping. Dealers sit up and take notice. This gives you the upper hand when you start negotiating.

Another benefit of arranging your financing in advance: It takes the pressure off when dealers offer you their special low-rate financing (based on a higher sticker price). They may offer you a rebate. Do the math, or ask the loan officer at your credit union to help you with it.

What if it's too late, and you're paying too much for financing at a dealer?

When you work out your payment plan, consider all the expenses of owning a car.

Use the rebate as part of your down payment to reduce the total amount of the loan.

You'll pay less in finance charges and have a smaller monthly payment.

Read on to step four and the conclusion of this article...

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