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How to Finance a New Car Purchase

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If you are in the market for a new car or truck, you will likely need to finance the price of your new vehicle. Most people do not have the ability to save up enough cash to purchase a new vehicle outright. This is why vehicle loans exist. Here are some tips on getting the best financing options.

1. Order a copy of your credit report to see where you stand. If your debt to credit ratio is greater then 50%, try paying down some of your debt before applying for a new car loan.

2. Shop around to make sure that you get the best possible interest rate. Inquire with your car dealership's financing department and with local banks.

3. Look for loans with a 60 month or less repayment period. You don't want to be making payments on your vehicle seven years into the future, especially since most people only keep their vehicles for an average of five years. Ideally, try to find a loan with a 3 year repayment period. Your payments will be higher, but you will own the car sooner and this strategy may prevent you from buying a car that you cannot afford.

4. Fill out the loan application paperwork. You will need to provide personal information about yourself such as your name, address, birth date, social security number, your annual income and the amount that you need to finance.

5. Put a down payment on the car. This will decrease the amount that you will pay monthly. Additionally, the smaller the amount that you need to finance means more money in your pocket. When you take out a loan, you must repay it with interest. Putting a down payment of 5-20% on your new car will save you hundreds, if not thousands of dollars in the long run.