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Get the best deal on an auto loan

Thanks to the high costs of new automobiles, many drivers now take out loans when replacing their existing vehicles. Such loans make it possible for drivers to purchase new vehicles they may not have the cash to buy outright, and making car payments on time each month is a great way for consumers to build their credit.

Drivers want to find great deals on their cars, but they also should make an effort to secure the most consumer-friendly auto loan they can find. Doing so can save drivers substantial amounts of money over the course of their loans, and finding a great deal is not as difficult as it may seem.

• Go to your lender first and foremost. Loan shopping before car shopping, as opposed to relying on dealers to arrange the loan once you find a car you want, can help drivers secure better terms. By prequalifying for a loan, consumers can then go to the dealership knowing exactly how much they can spend, saving themselves time and easing nerves some buyers may have about the car-buying process. Prequalifying with a bank, credit union or online lender does not lock buyers into those terms, leaving them room to secure even better deals by asking the auto dealer to beat the terms of their existing financing deals. Be careful not to apply for too many loans when loan shopping, as each application will lower your credit score.

• Clean up your credit. Creditors take many things into account when determining loan terms, but perhaps no variable is more important than an applicant's own credit history. If your credit history is bumpy or you are currently carrying substantial debt, pay off as much of your debt as possible before applying for an auto loan. Even if your credit history is not great, you may be in line for better loan terms if you have paid off your consumer debt and recently indicated you are capable of making monthly payments for an extended period of time.

• Comparison shop. Lenders compete with one another, and consumers can use that to secure the best possible loan terms. If one lender gives you loan terms that you find attractive, resist the temptation to sign on the dotted line right away. Sleeping on it and taking the terms to the lender's competitors or even auto dealers may ultimately result in you landing even better terms.

• Know the terms of the loan before you drive off the lot. Some financing terms may be classified as "contingent," which means the terms can change even after drivers take cars off the lot. That may mean higher interest rates or lengthier loans, which can cost drivers considerably more money in the long run. Drivers can avoid that fate by waiting until the terms have been finalized to accept the car and take it home.

Auto loans make it possible for millions of drivers to purchase new and reliable automobiles. Savvy borrowers who take the time to secure the best loan terms can save themselves substantial amounts of money and still drive the cars of their dreams.