If, on the other hand, you do qualify for a loan, and you have access to a credit union, it makes sense to see what kinds of terms they can offer you. Membership in a credit union means a greater level of customer service, but it may not necessarily translate into better loan terms. Credit unions should be considered according to the same criteria you’d use in evaluating any other lender.

And like any other lender, a credit union will have limits on the age of car it will finance, how much it will finance on a particular car, the length of the finance term, and who it will or will not lend to. If you haven’t yet decided on a car, it’s a good idea to meet with a loan officer at the credit union and talk about getting pre-approved. After all, there’s no sense falling in love with a car that you’ll never be able to afford.

To start the pre-approval process, decide how much money you can put down as a down payment and how much you want to finance. It’s a good idea to talk to more than one lender when you’re doing this. Different lenders have different underwriting criteria, and when you’re buying a car, an extra $2,000 can sometimes make a big difference. So can an extra percentage point of interest in the long run.

Speaking of the long run, that’s a figure that you very much want to keep in mind. Look at the total amount of money you’ll be paying when all is said and done, and look how changes will influence that total figure. For example, cutting a year off the loan term might only increase your payment by a small amount, but it could make a real difference in how much you have to pay back over the course of the entire loan. Generally speaking, it makes sense to go with the shortest term that’s practical and the highest monthly payment that’s practical if you want to save money. And after all, who doesn’t?

If you think you may not keep your car for the entire term of the loan, be sure to find out if someone else can assume your loan and if you get a pre-payment penalty for paying the loan off early. Your credit union should be able to give you this information with no problems.

But before you even talk to the dealer, there are a few questions you need to ask yourself that will help you in your negotiations. First, you have decide on the car model you’ll be buying – including features like air conditioning, AWD, a CD player or more – and know the manufacturer’s suggested list price for each of these additions. Fortunately, you can do this on the web now, although any reputable dealer will be more than happy to sit down with you to discuss this, especially since it expedites the buying process.

You also need to decide how long a loan term you’re willing and able to commit to. Contact the bank or credit union that will be underwriting the loan and see what they offer in terms of loan terms and interest rates, given the amount of money you’ll be financing and the car you’ll be buying. Fill out the application papers at your credit union or bank and see if your credit rating is sufficient to allow you to qualify for their rates. Be sure to also check on any fees that you’d have to pay as part of the deal.

Now it’s time to go to the dealer. While at the dealership, give the dealer a description of the car and any additions that were part of the estimate that the bank or credit union got. Ask for the same interest rate on the amount of money that the bank offered you. Here’s where the fun begins. Ask the dealer to make a counter offer that will be lower than what the bank or credit union offered you. This will generally happen because the dealer wants to sell the car – especially now when inventories are so inflated.

Next, ask for the bottom line, which is the total of the interest and principal – the total amount you’ll pay over the life of the loan. This is where your dealer may be able to negotiate something better than the bank. Finally, check to see if there are any prepayment penalties if the loan is paid off early; obviously you don’t want to have any, as these will negate the benefits of all the negotiating you just did.

So, in a nutshell, what you’re going to do is get the best offer you can from a bank or credit union and use that as your bargaining tool with the dealer. When a dealer sees you’re approved for a loan, they know you want to buy. Of course, they want you to buy from them, as opposed to some other dealer, so they’ll do what they can to entice you to spend your money with them. If the dealer won’t offer you a better deal than the bank, walk away – there are plenty of other dealers out there who will be more than happy to make you a customer.

First, your friends and family members can be valuable resources when it comes time to creatively finance your car purchase. For example, they may be able to loan you the money to make a down payment on the car that will, in turn, enable you to get traditional financing. There’s also the possibility that they may be able to loan you the entire amount required to purchase the car.

However, any time you borrow money from friends or family, treat it like the business transaction it is. Agree on the term of the loan, an interest rate and a repayment schedule. This should all be placed into a written agreement that you both sign. Your “lender” should get some type of collateral to help secure their loan. For example, you can give them a security interest in the car you’re purchasing or anything else you own that has significant value. This will help to ease their concerns about lending money and will give you an incentive to make good on the loan.

A loan assumption may be another possibility. This entails having a friend or family member make the purchase and secure a loan, which you then assume. However, before you go this route, make sure you can legally assume the loan by checking with the loan’s originator. Not only can this help you get a ca, it can also help you build your credit.

Obviously, it goes without saying that in all of these cases, it’s important that you make your payments on time and in full. If you’re at all concerned about your ability to make the necessary payments, wait until you’re in a more financially secure position to buy a car. Before you approach any friend or relative for help, be willing to accept no for an answer without letting it damage your relationship with them.

But don’t think that traditional financing is out of your reach. Car dealers have a vested interest in getting you financing for your car. After all, until you purchase the car, they don’t make the sale and earn their commission. They also make a small profit on the car loan as well, so if they provide the financing; it’s a win-win situation for them. If you have a friend or relative who’s previously purchased a car from the dealership you’re thinking of working with, ask them if they’d be willing to approach the dealership and ask them to finance the car for you. Repeat business is important to most businesses and when a valued customer asks for a favor, most businesses will do everything they can to accommodate that request. You may not get the best interest rate or deal, but at least you have a start. Once you’ve improved or established your credit history, you may be able to negotiate a better rate or refinance the car.

Or, instead of working with a dealership, you may be able to find an individual selling a car who’s willing to work with you on payment arrangements. Just be sure you follow the same guidelines listed above for treating the deal like a legal sale.

Another way to creatively finance your auto purchase is to purchase a car that you can use for the short term. If you pay $500 for a car that works for five months, you’ve paid the equivalent of a $100 a month car payment – which is pretty good, no matter how you look at it. Spend a little more time saving money and you may be surprised at how much functional car you can buy for a relatively small amount of money.

When you’re looking for a new car, ask around and read reviews online so that you’re sure to get a reputable dealership. And even then, who’s to say that one of their salespeople doesn’t use tactics the dealership wouldn’t approve of but manages to keep those tactics under the radar? There are a few common “scams” to watch out for.

A salesperson who’s trying to sign you up for higher APR financing may tell you that your credit score is too low for you to qualify for the better rate. They may even have a piece of paper with an actual number written down. This tactic plays on the fact that many people are clueless about their credit score or what that number even means.

The only way to fight this tactic is to know your credit score, or even better have a copy of your credit report on you, when you look at cars. If you’re told you have a poor score and the financing will be higher because of it, present your credit report and ask where they got their information just for fun before you go somewhere else to buy your car. Of course, this will only work if you do have good credit.

Another tactic some dealerships might use is aimed at people with not-so-great-credit. People who don’t have good credit can benefit from having a cosigner on a new car loan that has good credit. This is something that’s been done for years, and helps people who are just on the edge become able to secure a loan. But for truly awful credit, not even a good credit cosigner can help.

If you have poor credit, though, and the dealership says you’ll need a cosigner to get the loan, and by the way it will help your credit, they may be on the up and up. A few will trick you and your cosigner into putting the whole loan in the cosigner’s name with your name nowhere on the financing. This is done because your credit is low enough that you couldn’t get financing even with a cosigner, but the salesperson wants to make that sale, so you’re tricked. You might be allowed to sign a contract at different times, or you’re given two separate contracts.

Avoid this one by signing together, and making sure you sign the same document. Read it carefully. This will keep your new car loan from ending up solely in your cosigner’s name which burdens them with the new car financing and won’t affect your credit at all.

If you have poor credit you won’t get a good APR anywhere you go, though you could shop around at a finance company for a slightly better rate. But if you don’t know your credit score, how do you know what you’re being told is even true? Get a copy of your credit report before you go to the dealership, just for this reason. If the number they give is drastically different, show them your report and know that they’ve just tried a tactic with you on the assumption that you were clueless about your own credit. Do you really want to do business with someone like that?

Another tactic is to sell you the car, then after a short while call you and let you know the great news—you can come in and sign a new loan contract that offers a much lower payment! The catch with this tactic is that while your monthly payment is lower, they’ve extended the terms of the loan. You might be paying for one year, two years or even more beyond the amount of time in the original loan agreement. So in the end, you’ll be paying more. If you’re given such an offer, just turn it down.

Something that’s happening a lot today is the salesperson insisting on running a credit check on you even when you don’t plan to finance through the dealership. They may even claim that they have to before they can sell you the car. This is just a way to get your permission to run a credit check so they can formulate a financing offer and try to beat the financing you’re getting elsewhere. While there’s no harm in letting them try to beat the terms and give you a better deal, if you’re set on outside financing there’s no need to let them check your credit.

Another way unethical salespeople can get extra money out of you is by claiming that their bank won’t approve your new car financing unless you pay X amount for an extended warranty or X amount for insurance that will pay for the car if you die. If they won’t approve the loan now, why would they be willing to approve an even larger loan? This is just a way for the salesperson to make more money from you and your new car loan.

In order to get automobiles out the door, dealers and car manufacturers are offering cash back, dealer rebates, and employee pricing on many of their new cars.

Still, those who purchase new cars today will generally need to get a car loan to finance the purchase.

Despite the rebates and discounts, new cars today often cost tens of thousands of dollars, and car loans extend up to 5 and even 6 years. So a commitment to a car loan is not a decision to make lightly.

While you can get an idea of rates and terms before you’ve made a final decision on a car, you can’t actually do the heavy shopping for a new car loan until you know exactly which new car you’ll be buying.

Lenders need to know the type of car and features as well as the selling price before they can determine what loan terms they’re able to offer.

You can, however, get preapproval for a loan up to a certain amount from a bank or credit union. This preapproved financing can help you in the purchase and negotiation process.

When you decide on a car, do not let the financing be part of the negotiations. Once you and the dealer both agreed on a price, it’s a good idea to get a quote from the dealership so you know what terms they are willing to offer, the interest rate, and length of loan. Make sure their offer stands for several days, and get the agreement in writing in case you decide to return to their financing.

However, you’ll immediately want to take the particulars of the car and the price to your credit union or bank. If you have a preapproval, give them the actual numbers and specs and let them run an official offer that you can compare to the dealer financing package.

If you don’t have preapproval, you can get a solid, committed quote from them. Find out if they offer a discount on the interest rate for automatic withdrawals, and consider that into the offer.

There are online automotive financing companies as well, and they are a great place to look for comparison rates.

When you begin to see what terms – the length of the term, the interest rate and the monthly payment amount – you can decide who is offering you the best deal and decide if you can really afford that amount in your monthly budget.

Hopefully you did a careful budget analysis before you began your car shopping and know the range that will work for you. But when you get the final numbers, its good to work it into the budget and see how it fits.

Be reasonable when you are considering what car to buy. Don’t get yourself committed to five years of very high payments if you wouldn’t be able to make those payments if you lost your current employment.

Military Car Loan Benefits

Almost any military member is eligible for this type of loan, which can be used for a new or used car or to refinance a current car loan.  The interest rates on military car loans are often much lower than for civilian loans and the repayment terms are usually longer.  These two factors can significantly reduce the amount of the monthly payment.  You may also qualify for reduced insurance rates as well.  All of these things together can provide military members who take advantage of these loans with substantial financial savings.

Eligibility Qualifications

Most military car loans require that the person is currently serving in the armed forces.  Military car loans do exist for service members with bad credit, although they may be required to pay a higher interest rate.  However, despite this increase, these loans still tend to have far lower interest rates than military members will find with traditional auto loans.  The length of military service will also affect the interest rate – typically, the longer the person has been in the service, the lower the interest rate.  In this way, it’s not much different than a traditional loan, as interest rates are usually lowest for individuals who have been at the same job for many years.

Where to Find a Military Car Loan

First of all, check with the bank or credit union on the base where the you have been assigned.  The institutions associated with your base are usually able to find the lowest interest rates or the most reasonable offers for military car loans.

You may also want to search online for lenders that specialize in military car loans.  However, do your research and make sure the lending institution is reputable – not all of them are, and some will offer loans with hidden fees or interest rates that rise over time.

The Application Process

In general, the application process for a military car loan is very simple and can often be completed online.  You’ll need to provide proof of your military service and information about your assigned base, as well as your address, phone number, email, and other contact information.  Usually, you’ll receive an answer within a day or two – many servicemen and women will be able to drive off in their new cars within just a couple of days of starting the loan process.

Setting Up Repayment Methods

If the you’re often deployed overseas, it’s best if the loan payment is set up to come directly out of a checking or savings account.  This will help to ensure the loan payment is paid on time every month.  Another option is to have a family member, such as a spouse or mother, be responsible for the loan payments while you’re out of the country.  Unfortunately, if the payment isn’t made for any reason, the car could be repossessed.  Plan ahead so that even a tour of duty doesn’t get in the way of your ability to make your payments on time.

Find a Cosigner

The quickest and most effective way to get approval for a car is to get a cosigner.  This person should have good credit and be able to qualify for the loan without you.  They can then sign for the note stating that they’ll be held responsible if you aren’t making payments on the car.  While this sounds easy enough, it can be difficult to find someone who will vouch for your bills if you default.  However, if you can prove that you’ve cleaned up your act and have sufficient funds to make your payments, you can quickly get into the vehicle of your choice.

Consider Buy Here, Pay Here Lots

Many car lots offer “buy here” financing, meaning that they privately finance cars for people who can’t qualify with a bank or lender.  In most cases, these companies won’t even check your credit – you simply provide proof of a stable work history and residency and you can get a car.  You’ll usually need to provide a down payment for the car you choose, which can vary from a few hundred dollars to a few thousand. You may also be required to pay weekly or monthly for your car payments so the company knows immediately if you aren’t financially sound.  Most of these lenders can structure your payment due dates to match up with your paydays, making it easier for you to stay on top of your responsibilities.

Rent-to-Own Is an Option

Many car lots are now offering rent-to-own financing.  In this situation, the car lot allows you to pay a down payment and the first payment, and drive a car off the lot with no questions asked.  The car lot will retain ownership of the vehicle until the final payment is made, and if you default on one payment, you lose your entire investment.  However, because the car lot retains ownership, they’ll be responsible for paying all the taxes, fees, and registration costs until the vehicle is paid in full.  This can save you money if you’ll be paying the car out over a few years or if you can’t afford to pay the sales tax charged when you buy a vehicle outright.

As you can see, all hope isn’t lost if you have bad credit and need to find a new car.  By shopping around and checking out local car lots, you may find many more opportunities than you ever knew existed.  Even if you’ve been turned down at one lot, don’t give up hope – check around until you find a dealership that’s willing to work with you.