North Americans’ love affair with the car remains undiminished and sales are on track to continue strong throughout 2004, with approximately 60 million new and used vehicle sales forecasted. Two nice carsYet while most shoppers enjoy poring over the styles and features of their dream car, they often ignore one of the most critical parts of the transaction: financing.

“Buying a car can be an emotional process, but consumers really need to do their homework and take a strategic approach if they want to get the best possible deal on their loan,” says Scott Denman, Managing Director, AAA Financial Services. “Many car buyers don’t pay close enough attention to their financing, and it can be a costly oversight.”

“Consumers routinely use the Web in their car selection process, researching models,

options packages, and price information,” says Brian Reed, Vice President of Capital One Auto Finance. “The savviest buyers go further, however, taking control of the purchase process by getting their vehicle financing upfront, online. Having a car loan in hand when they walk into a dealership gives them the flexibility and negotiating power of a cash buyer.”

By educating themselves before shopping and mapping out a game plan, consumers can gain the upper hand when negotiating their vehicle loan. To help consumers pave the way for a better financing deal, AAA offers the following tips:

Check your credit rating

Obtain a copy of your credit report to ensure it’s in the best shape possible before applying for a loan. Credit score plays an important role in determining the interest rate you’ll receive. Make sure your lines of credit are in good standing and identify open lines of credit you can close. Be sure to correct any errors promptly. You can order a credit report from one of the three major credit reporting bureaus: Equifax, Experian, or TransUnion.

Explore financing options and compare rates

Many people know they can get a car loan from the dealer’s finance department–but it pays to research other options. For example, Internet auto lenders provide a combination of low rates, convenient application process, and fast response. Whether you choose an online lender, bank or credit union, be sure to comparison shop for interest rates first, so you know you’re getting a competitive rate. AAA members have access to online vehicle loans at

Arrive with financing in hand

Having approved, no-obligation financing in your pocket gives you a competitive advantage when you go to buy your car. That’s because you know your interest rate and monthly payment in advance, which gives you an idea of the price range of cars you can afford. This approach also lets you buy with the power and flexibility of a cash buyer.

Treat your purchase as three separate transactions

Buying a car usually involves three different transactions and it’s best to treat each of them separately; 1) financing; 2) trade-in; and 3) vehicle purchase. This strategy will help isolate each act, keeping them clear and simple, while maximizing your negotiating opportunities.

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Weigh your purchase incentive options

Many auto manufacturers will offer a choice between a cash rebate or a discounted financing rate as a purchase incentive, but usually not both. Even if you’re among the minority who qualifies for a 0-percent rate, don’t assume it provides the most savings. Sometimes you’ll come out ahead by applying the rebate to the purchase price and using your own low interest rate loan. Bring a calculator or laptop to the dealer to see which option is best for you.

Match length of car loan to expected length of ownership

Select your loan term based on how long you plan to own the vehicle. Buyers who take out longer-term loans to keep their monthly payment low can find themselves “upside down” on their loan–that is, owing more money on the car than it’s worth in trade.

Take your time reviewing the contract

Don’t put pen to paper until you know the following: your interest rate, monthly payment, amount you are financing, the length of your loan, and your trade-in value. Also, make sure unwanted after-market “extras” haven’t been added to the deal.

With a few quick stops on the Internet, you can take your next car buying experience to a whole new level, that of an empowered buyer, in control of the deal.

“The Internet has reinvented the way people finance their cars,” says Denman. “It’s changed the balance to favor informed consumers. Doing your homework before visiting the showroom is a must.”

Additional car financing information can be found by visiting   —Courtesy of ARA Content

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