Choosing Auto Dealers Wisely

Before you head down to the dealership or bank for auto financing, there are a few things that you can do to prepare at home. Auto financing is one of the most significant financial decisions you'll make, especially early in life, and you will want to make sure that you're prepared.

1. Get Together Your Pay Stubs

Either get together the pay stubs from your checks or print out your bank statements to show your direct deposits. Your income is going to be extremely important in determining how expensive of a car you'll be able to purchase, and you'll be asked to verify this income with statements or stubs during the loan process. 

2. Check Your Credit Report

You don't want to be in for a nasty surprise at the bank or auto dealership. There are many issues with credit that may not pop up until you actually check your report, such as erroneous information that is lowering your credit score. You can pull your credit report at Equifax, Experian or TransUnion to make sure that the data is correct.

3. Calculate Out Your Car Payments and Budget

It's always best to step into the dealership with a good idea of how much you can afford. Everyone's financial situation is different -- just because you have a lot of income doesn't necessarily mean that you should be getting an expensive car. Draw out a budget that includes all your income and expenses and find out how much you can afford to spend on all your car expenses every month. That includes maintenance, registration and insurance. 

4. Get an Insurance Quote

Speaking of insurance, don't assume that your insurance is going to remain the same or be similar. If you have a type of car in mind, make sure that you get an insurance quote. Expensive insurance can quickly make a seemingly affordable vehicle too expensive, while cheaper insurance can make a once seemingly too expensive car just the right price. You don't want to get the car of your dreams only to find out you can't afford to keep it insured!

The process of auto financing is usually very fast. When you go through a bank, it may take a week or two -- but most auto dealerships can complete the financing within a couple of hours, as they already have partnerships with local credit agencies. By preparing your documents and financial situation as outlined above, you can make the process even faster and easier.