Unless you are financially lucky enough to be able to pay for your next car upfront, you will need to finance the purchase with an auto loan. One of the most important parts of financing your car is loan shopping. Keep the following tips in mind while shopping for your car loan to make sure you wind up with the best possible financing situation. 
Do: Research and Referrals
The first step in shopping for an auto loan is researching the financing companies and banks you’re considering before trying to get any term quotes or offers. Research, reading customer reviews, and asking people you trust for referrals can save you a lot of time by removing options from the running that are obviously not the best fit.
Don’t: Take the First Good Offer
Loan shopping means getting more than one loan offer that could fit your financing needs so you can accurately compare and contrast the available options. You should never sign the first acceptable loan offer put before you. There could be one or more offers available to you that you've not found yet, and will miss completely by taking the first good offer.
Do: Negotiate the Terms, Not the Payments
Many people make the common mistake of trying to negotiate their monthly car loan payments instead of focusing on the actual terms of the auto loan. Read, and make sure you understand, the basic terms and the fine print of each loan you are considering. It is easy to become focused on the monthly payments, but the price of the car, interest rate, and other loan terms are just as significant.
Don’t: Take Too Long
Auto loan shopping has the potential to negatively impact your credit rating if you let too much time pass as you shop. Every time you get a detailed and specific offer from a lender, they will need to inquiry your credit report to determine your available financing terms based on their requirements. The credit report agencies understand that loan shopping is a responsible step to take before financing a big purchase, and they take that into account when calculating your credit score. Inquiries from auto lenders that happen over a certain length of time, usually between fourteen and thirty days, will be grouped together by the credit bureaus so there is only a negligible impact on your credit score. For this reason, you should do all your loan shopping in a timely manner.
Shopping around for the best possible auto loan is the responsible way to finance the purchase of a car. With the sheer number of financing companies and banks at your fingertips, it makes sense to know all of your options before signing a loan contract. By staying informed and working on a two to four week timeline, you can make car loan shopping work in your benefit.
*Image courtesy of freedigitalphotos.net
