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Car financing is sometimes a bigger issue than selecting the car to purchase was. To many, it is just a means to an end. The reality is that many hundreds of dollars can be wasted in unnecessary finance charges, far exceeding savings enjoyed by a sharp negotiator with the purchase price on the vehicle.

The first step to shopping for a new car should be a visit with your local banker, or credit union. Knowing what their interest rates are, and how much you are qualified to borrow is essential to preparing to shop intelligently. With this information in hand, you are ready to shop.

After selecting a car that meets your needs, and will deliver the pride of ownership that will keep you happy; the price of your car should be negotiated. Once agreement on price has occurred, the next step is to discuss the dealership's financial arrangements. All car dealers have potential specials available in the area of promotional interest rates, and/or rebates. This will require your analysis.

This analysis of the actual cost of financing requires the bank information which you had the foresight to obtain. The difference in real dollar terms between financing with them, or your local banker will tell you if taking the rebate might be in your best interests. Only by looking at the actual numbers can you determine your best deal. If you feel unable to do your own instant analysis, take the figures home with you to have your own banker look it over with you.

Once a decision is obvious as to which is a better deal for you, it is time to be wary of add-ons at the time of doing the paperwork. The option of adding credit life, or accidental disability insurance to your deal should be declined. Insurance matters are big profit items for your banker, and the friendly car agency. Your local insurance agency will probably beat their rates for coverage at a fraction of the price.

In addition, other optional services such as extended warranties should be avoided. New car warranties cover most major items quite sufficiently, and the extended warranties may not provide much beyond that provided by the manufacturer. The finance manager in any new car agency is paid handsome commissions for selling these extras, so keep that in mind.

As a general rule, walking out of the financial closing on your purchase with only interest charges added to the agreed price of your vehicle will signal that you have made your best deal on financing your new car. Just a small amount of extra effort can save a surprising amount of money in financing a car. There is no substitute to being well prepared.

Learn more about this author, Bob Schmidt.
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