Profit in financing
Dealers will often paint a low price on the windshield, and then make their money back when they finance the car. Sometimes, dealers offer very low interest rates for specific cars or models, but then they won't come down a penny on the price. Or to qualify for that rate, you'll have to pony up a large down payment. You might find it a better deal to pay higher financing on a low-price car or you may go for a vehicle with a low down payment.

Bottom line -- know your numbers. Be sure, every step of the way, that you know just how much you are paying, when, how and what for! No exceptions! Read -- and be sure you understand -- every word of every document you sign or initial. No exceptions.

Length of loan
Also keep in mind that time is money when it comes to financing -- meaning that the longer your loan term, the more it will cost you.

Some lenders are offering loans that run to 72 and even 84 months. Run from those like the plague because the interest rate will be substantially higher than even a five-year -- 60 month -- loan. Also, the longer the loan term, the longer it will take you to reach a point where you're no longer "upside down'' on your loan -- meaning you owe more than the car is worth. In a later chapter, we'll discuss how much of a down payment you should make to shorten the time you're upside down on a loan.

Dealer come-on? Go!
Lastly, don't fall for the currently hot dealer come-on that says, "We'll pay off your car no matter how much you owe!'' What this always entails is rolling over the balance you owe on your trade into the new car loan. So that new $25,000 sedan you just bought could carry a loan balance of $28,000 to cover the $3,000 you still owed on your old car.

Falling for that financing gimmick will make you a long-term loser.