Financing a car is a significant financial commitment, and making informed decisions throughout the process can save you money and reduce stress.

Following the car financing tips below can help you secure the best deal.

Research and prepare before financing

1. Check your credit score

Your credit score is critical in determining the interest rate and terms you’ll be offered. Review your credit report before starting the financing process and dispute any errors you find. If possible, take steps to improve your score, such as paying down credit card balances or making on-time payments. This effort can position you for better rates.

2. Determine your budget

Before heading to the dealership, calculate how much you can afford to spend. Consider all car-related expenses, including monthly payments, insurance, fuel, and maintenance. Financial experts recommend spending no more than 15% of your take-home pay on total car expenses.

3. Save for a down payment

The larger your down payment, the smaller the amount you’ll need to finance. A down payment of at least 20% on a new car or 10% on a used car can often help you obtain better terms, reduce your monthly payments, and minimize the overall interest paid over time.

Negotiating at the dealership

1. Focus on the total vehicle price

Negotiate the car’s out-the-door price, which includes taxes and fees, rather than the monthly payment. Dealers may use a low monthly payment to obscure a higher overall financing cost.

2. Separate price and financing discussions

Finalize the car’s purchase price before mentioning your financing plans. This caution ensures the dealer won’t adjust other aspects of the deal, like interest rates, to compensate for a discounted vehicle price.

3. Leverage any preapproval

If the dealership offers financing, compare it to what you’ve already been preapproved for (if applicable). Use your preapproval as a bargaining tool to negotiate a better rate. Dealers often have room to match or beat outside financing.

4. Avoid unnecessary add-ons

Dealerships frequently upsell products like extended warranties or gap insurance, which can increase the borrowed amount. While many of these are great to have, assess your personal needs and decline anything you don’t want.

Managing the financing after a purchase

1. Make timely payments

On-time payments are critical for maintaining a healthy credit score and avoiding penalties. Consider setting up automatic payments to ensure you never miss a due date.

2. Monitor opportunities to refinance

If your credit score improves or interest rates drop, refinancing could reduce your monthly payments or total interest costs. However, you must evaluate the terms carefully to ensure that refinancing benefits you once you’ve factored in any associated fees.

3. Pay more than the minimum

Whenever possible, pay more than your required monthly payment. Extra payments go directly toward the principal, helping you repay the debt faster and reduce the total interest paid.

Look out for yourself by taking your time

By doing your homework, understanding your financing options, and negotiating wisely, you can get favorable terms and save money in the long run.

Remember, preparation is key — check your credit score and focus on the total cost rather than just monthly payments. With these strategies, you’ll be ready to navigate the car financing process expertly. See if you pre-qualify for auto financing with Credit Acceptance today. We can connect you with some of the 15,000+ dealerships in our network.