Once you find the car you would like to purchase, unless you plan to pay cash, you will need to find some sort of financing. Financing can be a big problem if you are not cautious about obtaining it. It is better to go through your bank or credit union so that you are the only person named on the loan. The problem is, not all of us have the credit score to be approved for a loan.

When you apply for credit at a car dealership they may ask you for a co-signer based on your credit score. This will open up a whole new can of worms. First, by using a co-signer, many times, the car will not be in your name. While you think this person is just co-signing, in reality the dealership has had them sign a contract and they are the rightful owner of the car. Because of this your credit score will not be affected by the payments you make on this car. You may also find issues when you go to register the car or buy an auto insurance policy.

Another thing you must be very careful about is your old car. If you are financing a new car but you still owe on your older car, you want to make absolutely sure your old car balance is paid off in full with your new loan. Many times the dealership will tell us they are giving us the pay off figures when in reality, you still owe on the old car. Make certain you read the loan agreement thoroughly and check to see that your old car balance has been paid off.