If you are thinking about purchasing a car or refinancing your car loan, you should do your homework and perform simple research before making a decision.
Understand your FICO and other credit report items. Your FICO score assesses your credit worthiness. It might not tell the whole story about your ability repay a loan, but it's used by every lender. Your FICO score can determine whether or not your loan is approved and at what interest rate you will be charged. You can get a free credit report online at myFICO.com
Always make certain to pre-arrange financing before you go car shopping. This way, you'll find out beforehand how much the car loan can cost you and what you can afford, both in terms of monthly payment and total cost.
You'll also have a bargaining advantage negotiating with the dealer, since part of the purchase price they offer is always dependent on whether they will make the loan. Dealers will often accept a lower purchase price if you take their financing offer. Run various scenarios in advance to determine where your trade-off amount starts.
It may well be worth accepting their financing offer if the purchase price is low enough. You can refinance the day after, after all. That too has costs, though, so be sure to include that in your calculations.
Another advantage of having pre-arranged financing is the confidence you get from being able to walk away from any unattractive deal. New cars especially are virtually identical from one dealership to the next. If you get a better offer elsewhere, it may be worth it to just move on.
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