![]() ![]() Van Alst says many people don't realize it, but the dealership is allowed to jack up the rate it offers you above what you actually qualify for. "People are being charged more for interest rates than they should be based upon their creditworthiness," says John Van Alst, a lawyer with the National Consumer Law Center. So before you start car shopping, you might want to build up your credit score or get erroneous information off your credit report.Īnd shop around for the best rate. Reed says getting preapproved also reveals any problems with your credit. "How much car can I afford? You want to do that before a salesperson has you falling in love with the limited model with the sunroof and leather seats. So Reed is going to pull back the curtain on the car-buying game.įor one thing, he says, getting a loan from a lender outside the car dealership prompts buyers to think about a crucial question. He also worked undercover at an auto dealership to learn the secrets of the business when he worked for the car-buying site. He's the autos editor at the personal finance site NerdWallet. "The single best advice I can give to people is to get preapproved for a car loan from your bank, a credit union or an online lender," says Philip Reed. Get preapproved for a loan before you set foot in a dealer's lot. Here's how to buy a car without getting over your head in debt or paying more than you have to.ġ. Ouch! That is not a winning personal finance strategy.īut don't worry - NPR's Life Kit is here to help. ![]() They're paying for a car they don't drive anymore. A third of buyers roll over an average of $5,000 in debt from their last car into their new loan. And let's face it: Trading in a beat-up clunker with grimy seats is an enticing idea.īut many Americans make big mistakes buying cars. New cars these days have better safety features and more tech gizmos than models from a decade ago. Jan Stromme/The Image Bank/Getty Images Plus ![]()
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