As if arguing with the car salesman about what you are willing to pay over invoice isn’t bad enough, getting a car loan can hang in front of you like a financial noose waiting to tighten. Often, it’s the car salesman himself holding the noose, saying, “Don’t worry, we offer financing! Simply step this way…” Don’t panic. There are some tips that can help you navigate your way through the tricky world of car loans. Following these tips will ensure that your loan process is as simple and painless as possible.

1. Know how much you can spend

Since the terms of your car loan can depend on how much you pay down on your car, know how much you plan on spending on your car, how much you plan to put down, and what payments you can afford.

2. Get quotes

Look around and find lending institutions with the lowest interest rates. Remember, you don’t just save money by dickering over your car price. Getting a car loan with even 1% lower interest than another can save thousands of dollars. Are you planning on buying a used car? Find out used car loan rates, as these are typically higher than new car loans.

3. Get pre-approved

No matter what you do, no matter what your intentions (I’m not really planning on buying anything today…), make sure to get a loan pre-approval before you ever step onto a car lot. Doing so will not only ensure you the best interest rates, but can provide bargaining leverage when the dealership offers its own financing package. There are many places to get pre-approved, so check out as many as possible. A few places to receive car loans are:

* Banks
* Credit unions
* Online lenders

4. Know your terms

Did your lender offer you exceptionally low payments on a high-dollar car? Look at the repayment period, as car loans can usually run anywhere from four to seven years. A seven year loan, while offering low monthly payments, can add up to thousands of dollars in added interest.

Find out if your interest rate is contingent on you having life insurance. Lenders want to make sure that the loan can be repaid should anything happen to you, and often require proof of life insurance as a stipulation.

Do you like to pay extra money on your car payment every month? Make sure that your lender doesn’t charge you extra to pay your loan off early. Even if you don’t plan on paying off the loan early, choosing a loan that doesn’t penalize you for pre-payment ensures that you are free to refinance or pay the car off early without incurring any fees.