Released: January 08, 2007

How to avoid car financing traps

Source: Gerri Willis, CNNMoney

With all those cool cars at the Detroit Auto Show, it’s tempting to start your search for a new set of wheels. But before you step foot in a dealership, you need to know how to avoid car financing traps.

1: Watch for pie-in-the-sky promises. Those $0 down, 0% interest, and zero payments may sound great. But at the end of the day, it’s all advertising. First of all, only about one third of buyers who apply for 0% financing actually qualify for it, according to Steve Schooff of Capital One Auto Finance. The people who do qualify have top notch credit. We’re talking scores over 750 generally, says Rob Gentile of Consumer Reports. And don’t forget, these are incentives by the manufacturer, so make sure you get some freebies from the dealership too.

2: Get independent financing. Your weapon against dealership antics is to secure independent financing before you go to the showroom.There is less game-playing when you apply for a car loan at a local bank, online or at a credit union, says Philip Reed of Edmunds.com. Check out Bankrate.com to review rates at a number of lenders.

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