Buying an automobile can be a complicated transaction.If you don't do enough research you may pay much more for your vehicle and end up with a really high car payment because of your interest rate. A good or great credit score is a key factor to obtaining a low interest rate.

Before you ever visit a car dealership, you need to have a good idea of what vehicle you are seeking, how much you can afford to spend, and do not go over budget! Knowing your credit score will give you a better idea on whether you will qualify for a loan. You can get a free copy of your credit report each year at www.annualcreditreport.com. An automobile salesman makes more money based on the more you spend. They also will try to talk you into spending more than you can afford, do not let them sell you on upgrades that you do not need and cannot afford. Be firm. Research invoice prices, research vehicle quality, and walking away from a deal can many times result in a better deal the following day. If you are not in a hurry, they will come crawling back to you. With the economy being so tough, car dealers are hurting for your business. Walk away at least once. The vehicle will still be there tomorrow. Make sure you research rebates, discounts, and special interest rates that are available as well.

Many automobile dealerships offer low interest rate incentives. Many people do not qualify for these rates because of their credit scores.

ARE LOWER RATES BETTER THAN REBATES?

Generally speaking a Zero percent interest rate is ALWAYS better than a rebate. Many times even if you do not qualify for the zero percent, you can get zero percent interest if you are able to put some or more money towards your down payment. Talk to the dealer and make sure you work the numbers to see which benefits you more and do NOT just take their word for which is better. Make sure you SEE it in writing.

IS A LEASE A GOOD IDEA?

Generally speaking, leasing is not beneficial in the long run.

LEASE: With a lease, you are basically renting a car for a long term. Many times you will have to pay a down payment, usually $1,000 to $3,000. With you lease a vehicle, you are only allowed to drive a limited number of miles during you leased time period. BE CAREFUL of this stipulation, if you go over the allocated number of miles you will accrue charges per mile!! A standard lease will allow you between 12,000 and 15,000 miles each year. At the close of your lease period you return the vehicle to the car dealership. Most times you will have an option to buy the vehicle at a reduced price. The main benefit of a lease is that your monthly payments are much lower than if you had purchased the vehicle. Leasing a vehicle is not a good idea if you don't want to continue to have car payments long term.

Buying your vehicle

When you buy, you pay the entire $25,000, plus finance charges, BUT you own the vehicle after it has been paid off. After 5 years, you vehicle may still be worth $10,000. You now have a vehicle and NO car payment. If you plan to put many miles on a vehicle, buying the vehicle is usually a much wiser idea than leasing one.