Car Loan

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• Another benefit with a pre-approved loan is you will only be at the car dealership as long as it takes for you to decide if you want to buy the vehicle or not. Without a pre-approved loan in your hand, you could be at the car dealership for hours and hours trying to get a loan approved from them. However, if you have done the mathematics, the dealership may have a better interest rate to offer you on an auto loan. That's very rare, (Read: Auto Loan Dealership Financing, Beware) but if they do, you haven't committed to the pre-approved loan yet. (Remember, pre-approved only means that a potential customer has passed a preliminary credit information screening. Neither a pre-approved loan nor a pre-qualified loan are seen as absolute loan commitments)
• If you are wondering how much of a pre-approved loan you should ask for from your lender, with a bit of calculating, you will be pre-approved for what your lender knows you can pay back, or you may be pre-approve for more than you actually need if you have pretty good credit. That decision then, would be up to you, if you really need the more expensive car just because the lender says you are qualified. That extra money each month could be used for other things, car insurance, gap insurance, gas, maintenance on your new vehicle, fancy floor mats, or dinner and a movie every Friday night.

• When shopping for a pre-approved loan, make sure the lender gives your a quote on a fixed rate of interest and not a variable rate that floats up and down as interest rates change.
• Some places to shop for a car loan are 1) Your local credit union, 2) The internet and 3) Banks.

Forced Placed Insurance:

• If the lender discovers that you have no car insurance on your vehicle, they will take out a special policy to cover the vehicle loan they approved for you. This kind of insurance is very very expensive and it only covers the collateral. The lender will then add the premium costs of the new vehicle insurance policy to your loan, and you must pay it, so make sure you get your own vehicle insurance coverage you need.

Credit Insurance:

• Some car dealers and/or lenders may ask you to buy credit insurance, on your auto loan contract it's stated as: Insurance (Life, Disability, etc.) to pay off your auto loan if you should die or become disabled. Before you buy credit insurance, consider the cost, and whether it's worthwhile. Check your existing policies to avoid duplicating benefits. Credit insurance is not required by federal law.
  
  Important: Make sure the dealer types N/A on that line of the auto loan contract if you choose not to buy credit insurance. N/A means not applicable (not applied). If information is inserted by someone else after you have signed the contract, you may still be bound to the terms of the contract. Insert N/A or put a cross through any blanks not applied to you. Never sign a blank document or a document containing blanks.

Extended Warranty: (service contract)

• Decide "before" you go shopping for a new vehicle if you need the extended warranty the car dealer will offer you at the time of signing your auto loan contract. An extended warranty provides for the repair of certain parts or problems after the manufacturer's original warranty period is up. Remember that a warranty is included in the price of a new vehicle while an extended warranty costs extra. Whether or not you should buy an extended warranty service contract depends on you. If you are going to drive and keep the vehicle for a long time, an extended warranty may be a good idea. Used car extended warranties can be a good idea too. It is best to get the extended warranty service contract that is provided by the manufacture. Ask what repairs are covered, if routine maintenance is covered, who performs the repairs, can repairs be made elsewhere, how long does the service contract last, and what, if any, are the cancellation and/or refund policies. If you purchase the extended warranty the price you pay for it will be included in your auto loan repayment contract making your monthly payment a bit higher if you leave the repayment plan at 5 years. In some cases, the dealer can arrange for a 5 year and 6 months repayment plan which could lower your monthly payment.

Trading in Your Old Car

• Discuss the possibility of a trade in "after" you have negotiated the best possible price for your new car and "after" you have researched the value of your old car. Check the library for reference books or magazines that can tell you how much your old car is worth. Though it may take longer to sell your car yourself, you generally will get more money than if you trade it in.

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