Most people go to car dealers because they want to know about that dealer’s brand of cars, what models are offered, what options are available, about gas mileage and safety ratings, about benefits his cars have over a competitor’s, about what cars the dealer has in stock, and at what prices. Some people also want to know how they might finance their purchase and if they can buy within their monthly budget.

In other words, we look to a dealer sales person — repeat, sales person —  to educate us about the car we might want and how to finance it. Sales people usually do a pretty good job at educating us but keep in mind that everything a sales person does and says is aimed at only a single objective — selling a car for the best possible profit for the dealership.

When you visit the dealer’s showroom or sales lot, you are on their home turf where they have the advantage. That’s where they want you to be. That’s where they can be more effective in what they do best, selling cars. Most customers who come in to buy a car on their own terms, get sold a car on the dealer’s terms.

So, how can we as car buyers retain control over the car buying process?

Don’t visit the dealer until the deal is done and you must go in to sign papers and pick up your car. Even those last steps can be avoided if you ask the dealer to send you the papers and deliver your car to you.

Fortunately, with the availability of the telephone, fax, the Internet, email, and FedEx, automotive consumers can now buy cars without setting foot in a dealer’s showroom — and stay in control of the process. It’s done every day by smart car buyers.

You can do all your research about cars on the Internet. With web sites such as Edmunds.com, Cars.com, Yahoo Autos, Consumer Reports, and hundreds of car enthusiast forums, not to mention car manufacturers’ web sites and dealer web sites, you can find everything you need to know without setting foot in a dealer’s showroom.

You can find out what models are available, in what styles, in what colors, with what options, and at what safety and reliability ratings. On some sites, you can compare one model against others. You can find retail prices, invoice prices, True Market Value prices (Edmunds), available incentives, and find out what other people are paying on owner forums. 

You can get test-drive and reliability reports and ratings from Consumer Reports and other car magazine web sites. On many dealer web sites, you can even find out what car models and styles/colors are available in inventory. You can also find online car loan calculators to compute monthly payments — and even shop for car loans online (you don’t have to use a dealer’s loan sources).

When you know exactly the car you want, contact local dealers and ask for price quotes. You can do it through the Internet via price request forms, via email, fax, or simply call the dealer and ask for their Internet sales department. By dealing with the Internet sales department you usually skip the on-floor commissioned sales staff with their heavy-handed sales tactics.

Tell the dealer exactly what you want and the price you want — or simply request his best quote. Of course, you should have already done your pricing homework and know about what you should have to pay. Unless you want to get into a long negotiating battle over the phone or via email, you should make your price expectations reasonable. If the dealer sees that you are low-balling with unreasonable price requests, you won’t get much respect from that point on.  However, if you work with more than one dealer, you will have the luxury of multiple price quotes that you can choose from.

Once you and a dealer have settled on a price, you could go down and look at the car, test drive it, sign the papers and drive away. Or you can ask the dealer to deliver the car to you at work or home, where you can inspect and drive it.

If you decide to go to the dealer to sign papers, be aware that you’ll be talking to the Finance and Insurance (F&I) manager, whose job is to not only work up the papers for your purchase  but to also try to persuade you to buy “extra profit” items such as security devices, paint protectant, credit insurance, and extended warranties. You won’t need most of this stuff.

In summary, by avoiding a dealer’s showroom, you can take control of your new-car purchases and save money. It’s a little extra work but you’ll be glad you did it.

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An inexperienced car buyer might assume that an auto loan is nothing more than working out an affordable monthly payment amount with his dealer.

However, an affordable payment doesn’t make it a good deal. In fact, it can be a terrible deal. With more knowledge about how car loans work, the buyer can almost certainly get either a much lower payment or buy more car for the same payment.

Auto loans are based on a number of important factors, all of which affect the monthly payment amount. Let’s take a quick look at those factors now:

Loan amount – the amount you borrow, including negotiated car price, taxes, and any extras

Down payment – cash that you pay up front to reduce the amount of your loan, and reduce payment amount

Loan term – the length of your loan, in months

Interest rate – determines the amount of finance charges added to the cost of your car loan

With these four factors, it’s easy to calculate your monthly loan payment with an online auto loan calculator.

However, you are almost never in control of these factors. And one factor can relate to another in ways that might not be obvious. 

For example, the MSRP (sticker price) of a new car — or NADA (“blue book”) value of a used car — can determine the maximum loan term. Generally, the higher the price of the car and the more recent the model year, the longer the loan that will be allowed. New cars may be approved for as much as 84 months, whereas used cars that are 5-6 years old may only be approved for 36 months. This means you could actually have lower payments on a brand new car than on an older car in the same price range.

Your credit score greatly affects the interest rate you pay on your loan. A high score gets you a low interest rate, and low payments. For example, if your score is 700+ you might pay 5.99% APR or lower, or even qualify for a special 0% APR promotional rate.

However, if your score is, say, 675-699, you might expect to pay about 7.34% or more, depending on the loan company or bank you use.

If your credit score is 575-675, you are considered sub-prime and might expect to pay 12.74% or higher, if you can find a loan company to approve you. If your score is even lower, say, 525-574, you are sub-sub-prime and should expect to pay at least 20% interest rate, if you can find a lender.

Buyers with poor credit may be limited as to the amount borrowed, which means a hefty down payment may be required to reduce the loan amount.

Recent bankruptcies, car repossessions, payment delinquentcies, job history, home ownership, and late child support payments are also considered when seeking auto loan approvals.

If you don’t know your FICO credit score, you should. You can get your scores and credit reports directly from Fico Scores/Reports. Be sure to check your reports for mistakes, and get them fixed quickly.

Other factors will also affect your auto loan interest rate and approval prospects.

Your income must be sufficient to make your new car payment and pay other monthly bills you may have. This is often called your debt/income ratio. Auto loan companies typically don’t like to see more than 45% of your income going to pay your debts, including a new car payment.

Buyers with poor credit can usually be approved by getting a co-signer. A co-signer is someone who is willing to agree to take over responsibility for making loan payments if the primary borrower defaults, or is unable to pay. If the co-signer’s credit score is good and has a good income, the loan approval will be based on that person’s credit and the income/debts of both the primary and co-signer. The co-signer should understand that his credit score is affected by the additional debt, as is the primary borrower’s.

In summary, different banks, credit unions, and loan companies have different loan rates, rules, and approval procedures. Therefore, you should always shop around, particularly if you have poor credit. You don’t have to finance your car at the dealer from which you buy your car. His rates and terms are not always the best.