Consider all of your options for financing your vehicle: direct loans from a bank, credit union, or finance company; loans from Internet finance providers; and dealer loans.

But financing details can be complicated, so do your homework. The advice below will help.

After you and the dealer have settled on a purchase price, you may need to sign some preliminary paperwork and give the dealer a deposit. If you need a loan to purchase the car, you'll also need to obtain financing. If you don't mind making financing arrangements ahead of time, many banks, credit unions, and auto clubs offer favorable interest rates on car loans.

At the dealership, you have a couple of financing options. First, you'll want to ask about special financing programs available through the car manufacturer. These are usually the best deals, offering low interest rates. Unfortunately, though, qualifying for these programs can be hard because special restrictions often apply (e.g., large down payment, limited payment terms).

You can also apply for a traditional car loan through the dealer, who makes additional money by arranging on-the-spot financing. But don't assume you're getting the best deal available. The interest rate on dealer-sponsored loans is usually higher than the interest rate that you would receive on your own.

Around this time, the dealer will try to sell you extras such as an extended warranty, service contract, or rustproofing. Watch out--these extras are expensive and often overpriced. If you're interested in purchasing them, be sure to negotiate a favorable price, or look into buying them elsewhere.

The dealer can also help you arrange proper insurance coverage of your car and make sure that the registration and plates are in order, or you can choose to do this yourself. In either case, once all the paperwork is signed, the dealer will hand you the keys, and the car will be yours!

Copyright 2003 Forefield, Inc.