• Determine your needs

Before getting a car loan, evaluate if you really need one. Take a look at your budget and try to compute if you can afford to get a new car. Make sure that you don’t spend more than what you can afford. A logical amount that you should be spending in your car loan should not be more than 10% of your income as experts would advise.

• Compare the different loans offered.

There are a lot of different car loans offered. One is through a bank loan which you can obtain directly from a bank. This can be easier if you already have an existing account with the bank, and you are in good credit standing. The second one is through a car dealership. This usually offers higher interest rates, since they usually obtain their financing assistance also from banks. The third one is through on-line loans, which are more or less similar to bank loans. Visit these establishments or the web site that offers loans and asks for quotations. Compare what they offer and the packages that come along with them.

• Compute the rates and go for the lowest offer.

In comparing car loans, make sure that you compute the interest rate and the duration that you’ll be paying the loan or the loan term.  Don’t be misled with car loans that offer a low interest rate since the term of the loan might be higher and in the long-run would have you paying for more. For example, loan A offers  an interest rate of 6% while loan B offers an interest rate of 4.5% but the former has a total expense lesser than 10,000 than loan B, with this you should go for loan A. This would entail that you would be paying less in the overall total of your car. However, though if you can’t afford the monthly payment of loan A, then you should go for loan B. This will depend on your paying capability.

• Check on your credit history

A bad credit history will always have your loan denied. So make sure to re-check your credit history and pay any withstanding debts. This can still reflect on your credit history but upon seeing that you have paid the balance, this would be more advantageous from the lender’s point of view.

• Look for a co-signer

If you have a low income, you can ask a friend, preferably a relative, to co-sign a loan with you. Make sure that your co-signer has a good credit history as well. This can increase your chances of having your loan approved.

• Save up for a down payment

To obtain a lesser interest rate for your car loan, a good down payment can be of great aid. So save up the highest amount you can to obtain that down payment. It is not advisable though to loan up an amount for your down payment since this can only add up to your expenditures.

• Does the paper work?

Obtaining a loan requires a lot of paper work such as your monthly income, credit history, billing statements and other financial statements. Before applying for a loan, have these ready to save you valuable time.

• Submit the application

Now that you have the paper works ready and a beaming credit history, fill-in that application and then submit it. Be prepared for whatever questions they might ask on your application.

Once your car loan is approved, make sure that you will be paying on a timely basis. Not committing on your due date would just translate into another bad credit history and would make no room for future loans.

Car financing is like getting your car without taking out a large amount of money from your pocket, but instead you go to financing agencies and firms who can shoulder or finance the expenses for you. In return, you pay them an amortized amount depending on the terms of the contract.

There are different ways that you can finance your car. However, each has its advantages and disadvantages.

Bank or Credit Firms

Some banks usually offer with them car loans at a low interest rate. Credit Unions and firms also have the similar offer as other banks.

Advantages

• The rates are competitive.
• You can personalize services from a bank agent.
• The add-ons don’t embed sales pitch on it.
• Bank agents are the ones who can tell that you are paying higher.
• Includes a life insurance for free.
• Includes disability insurance.
• Evenly distributed simple interest for the entire duration of the loan.

Disadvantages

• May not be as convenient as dealership.
• Longer processing period – cannot be done overnight or in a weekend.

Online Financial Firms

Nowadays, there are plenty of online institutions that deal or offer car financing. They all send spam and unsolicited emails just to advertise about their promo and offers.

Advantages

• The rates are competitive.
• Quick processing
• Easy way of getting a loan

Disadvantages

• May contain scams.
• May be dealing with unknown agent.
• Breach of trust and information security on the customer

Dealership

In the US, there are a lot of available car dealers who can work at the details and hassles of acquiring a car. You just have to look for the one that can be trusted and with a great reputation.

Advantages

• Very convenient
• Fast processing
• Sometimes competitive rate

Disadvantages

• Has a high push on add-on sales
• Payments are not equally spread.
• Pressure from dealers

Home Equity Loan

Sometimes you can finance your car by using the equity in your home as collateral to the car loan.

Advantages

• Very convenient
• Fast processing
• Sometimes competitive rate

Disadvantages

• Has a high push on add-on sales.
• Payments are not equally spread.
• Pressure from dealers

Bad credit used car loan

Sometimes, even though you have a bad credit standing, there are still agencies that cater for a car loan for you. They may offer only the used car but at a good running condition. If you are lucky enough, you may be able to find those that offer brand new cars.

Advantages

• Convenient for those with bad credit
• Easy processing
• Sometimes competitive rate

Disadvantages

• May increase your bad credit standing.
• Only used cars

After choosing which financing type you are going to pursue, it is best to determine the interest rate at which that said financing type can offer. The important thing is that you get a low interest rate with your loan or credit.

You may wake up one day that your car is no longer at the garage. So be sure to maintain a good credit standing. Also, other financing institutions base their interest rates according to your credit standing.

Getting a car through credits and loans is good as long as one can afford to pay the monthly payment without neglecting or being in conflict with the payments for the mortgage, education of the children, and food for the family.  You may have a BMW but in return you sacrifice the comfort of living – good house, happy family, enough food, vacation and recreation, and most of all, healthy life.

Most Internet guides focus on ways to help you save – like walking, car pooling, turning off home appliances, pulling the plugs, and other similar ways.  However, these are temporary solutions that may help you some, but cannot reduce your expenses for the long term.

To gain a more lasting strategy to beat the recession is to understand compound interest and how it affects your finances.

There are a lot of ways to effectively avoid compound interest.  A more effective, but less known, way to save money is mortgage acceleration.  Mortgage acceleration is paying off your mortgages in a much shorter time, like when you pay a 30-year mortgage in just 10 or 15 years.  The whole process basically saves you more than 15 to 20 years of compound interest on your mortgages.

Most of the mortgage acceleration strategies available today help you identify sources of income that you can use to pay your principal debt.       The secret is to make sure that more of the money you have left at the end of the month is paid against the principal amount of your mortgage.  And all these create a cycle that helps you have more money against the principal every single month.

An example would be very helpful in illustrating the benefits of mortgage acceleration.  Let us say that you are required to pay $1,000 on your mortgage every month, and $800 of this goes to your principal debt ad $200 serves as interest payments.  If you have an extra $100 every month, you could use that to pay against your principal debt. And because you lessen your principal amount by $100, your interest would be smaller too.  Therefore, the next month, you get to apply $101 to the principal, even if you maintain the $100 additional.  Month after month, you get to pay more against the principal amount of your mortgage.

This can also apply to your other loans and credits.  By all means, pay up all your high interest loans as quickly as possible.   You can also get credit cards that offer you balance transfer services at a low interest rate or a zero interest rate and transfer credit card debt to that credit card.  Do not just pay the minimum required amount every month. If you get something extra, then by all means pay off your debts.  It may be wise to save some money at the end of each month for emergency purposes, but the more money you use to pay off your debts, the better.

In short, the best way to deal with this recession is to avoid accruing interest.  Interest is the cost of borrowing money and compound interest adds a time element to it.  The more you dilly-dally, the more you pay.  Avoiding interest helps you save money, and it is a strategy that affects your finances in the long term.