Purchasing a vehicle can require a loan, but shoppers who look for the lowest price may save more if they are willing to do a little homework first, said Carol Young, Kansas State University Research and Extension family financial management specialist.

"Check your credit rating before shopping for a new - or newer - vehicle," she said.

"Prospective lenders typically check a prospective borrower´s credit rating before offering a loan rate," Young said. "If, for example, a prospective customer has a history of paying bills or making payments promptly, he or she usually will be offered a lower loan rate."

"If you know your credit rating, you´ll be better able to compare offers and evaluate rates," said Young, who advised checking with more than one loan provider.

"Special promotions such as zero down (payment) or zero percent loans may result in a low rate during the early months of the loan, but increase the rate during the life of the loan; lengthen the life of the loan; or apply only to certain individuals or car models," she said.

"To shop for a loan, start with a financial service provider with whom you have other accounts," Young said. "Use the time as an opportunity to discuss your overall financial ability and your credit rating. And, if your credit rating isn´t what you´d like it to be, take this opportunity to ask for suggestions about how to improve it before moving forward."

Check local and national offers marketed by automakers and dealers. Look closely at any add-ons that can add to the price of the car and/or the cost of the loan that are offered during the financing process, Young said.

Stretching out payments for a longer period of time may mean more money in your pocket every month, but extending the payment period adds to the cost of the vehicle, she said. Plan to pay off a vehicle as quickly as you can without shortchanging other essentials to minimize interest costs.

"Consider a two-to-four-year loan as a start. A longer payment period may be a red flag that you are trying to buy more vehicle than you can comfortably afford," Young said.

Insurance companies generally check a prospective customer´s credit rating (in addition to their driving record) before offering a quote, so a good credit rating may also mean a lower insurance premium, she said.

"In Kansas, prospective buyers may want to call the county treasurer's office to compare the taxes due on a new vehicle," she said. "Add up all of the costs before making your final choice."

For more information on managing money successfully, contact the local or district K-State Research and Extension office or check K- State´s financial management Web site: www.oznet.ksu.edu/financialmanagenent/.


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