My credit record shows three late payments from my previous car loan. How many points over the current APR should I accept as a penalty for those credit blemishes? One dealer already tried to increase it 6 points!

It's important to remember that the dealership's Business Manager (the person who handles the dealership's financing) works on commission. And it's important to remember that she's trying to sell you the highest possible interest rate. The higher the interest rate, the more commission she earns -- and the more you end up paying in interest charges.

What they don't want you to know is that the interest rate she offers you is negotiable. She'll point out to you that you'll have to pay a high interest rate because you are a credit risk. And she's right; you are. But that doesn't mean they can make a killing off of you. If you feel that the interest rate they are offering you is too high, then threaten to walk out. At that point, she may lower the rate by a point or so.

Finally, you should try other financing sources besides the dealerships. Apply for an auto loan online at Capital One, the nation's largest online financier. Their application form is quick and easy.

Learn about credit reports and get yours free.

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