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Arranging Your Financing

How are you going to pay for the car or truck that you're going to buy?

If you're fortunate enough to have thousands of dollars stashed away, you can always pay cash. If so, your job is greatly simplified. Be forewarned, however, that paying cash does not mean you're going to get a better deal. On the contrary, the dealership wants you to finance with them since they often make more money from the financing than from the selling price of the vehicle. So to them, paying cash is not necessarily a good thing.

Most likely, however, you'll have to pay for your vehicle through some sort of financing. Here you have three options:

1. Your Bank or Credit Union
You should apply now at your bank or credit union for a pre-approved auto loan. Visit them and ask lots of questions to learn as much as you can. Ask about the interest rate, monthly payments and required down payment. Ask also about shorter loan terms (for example, 48 months instead of 60) which can save you lots of money in interest charges.

The advantage to talking with your bank about all this is that they'll gladly give you the honest and straightforward answers you need in a no-pressure and friendly atmosphere. If your bank approves your loan, you're set. If they deny your loan, ask them why.

2. Online Lenders
Because of the low cost of doing business on the Internet, online financiers sometimes offer rates that are lower than those of the traditional banks. And that can save you lots of money in interest charges.

Try MyAutoLoan. Submit one quick loan application and you'll get up to four financing offers. Compare the offers and save. No credit, bad credit, bankruptcy are no problem. You can also try 1800FreshStart. They offer low-interest-rate auto loans for all credit situations.

3. The Dealership
Compare your best financing deal (from the sources above) to the dealership's financing offer and decide which is right for you. If your bank, credit union and online financier all denied your loan applications, then the dealership may be your only hope for financing. Since most dealerships have a variety of financing sources, they may be able to get you an auto loan despite your bad credit.

NOTE: Car manufacturers sometimes offer "Special Financing" deals (available through their dealerships) which feature super-low financing rates. Be sure to ask the car salesman about "Special Financing" when you are at the dealership. Be aware that you'll need a good credit score to qualify for these Special Financing loans. Only about 20% of car buyers do qualify.

Here's the bottom line about financing:

Comparison shopping is the best way to get the best possible financing deal.

Compare the rates and terms offered by every possible source -- banks, credit unions, online lenders and dealerships -- and choose the financing deal that's best for you.


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