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Auto Financing
Look at other financing sources before you go to a dealership. Understand
that dealerships want to finance your vehicle because it's profitable
for them. They make money from vehicle financing! Before
you even go to a dealership, take the time to compare other auto loan rates
available to you. Check a local credit union, a local bank, and other
options via the Internet. If your credit is not good, see Rebuilding Credit.
Know your numbers. The higher your credit score, the
better your interest rate is likely to be. Find out your credit score
several months before you begin looking for a car. This will give you
time to correct any mistakes on your credit report, or to begin improving your
credit score if it needs improving. You should know your credit score
before you start shopping for a car loan. To find out more about your
credit score and how you can improve it, see Rebuilding Credit.
Avoid financing over four years. Remember the Rule of
3 to 4! Don't finance a car for more than four years. Loans
that span 60 months or more cost you much more in interest, even though the
monthly payments are less. And, if you finance for a longer amount of
time, you are likely going to end up owing more than the car is worth at some
point. To avoid this, use a large down payment so that you can afford
to finance the balance for 4 years or less, or else find a less expensive
car you can afford to pay for in no more than 4 years.
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