Avoid overspending on a car loan by reading the fine print

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Dealerships often advertise things like “no money down" or "low monthly payments” to get you in the door. Remember that the duration of your loan directly affects the total purchase price. A longer loan, therefore, may mean a higher purchase price regardless of what incentives you are being offered. The extra months of payments can more than make up for the money you don't have to put down, or can cost more than the lower monthly price – not to mention the extra taxes and fees each month. The best way to maximize your budget is to get the shortest loan you can with the highest monthly payments you can afford, since this will mean a lower total price. Of course, be sure to negotiate the purchase price first (before financing) and calculate the overall costs carefully before you sign on the dotted line. If you are not sure or the numbers are not satisfactory, hold off on the purchase or keep negotiating – don't be persuaded just by the special offers or low interest rates.

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