Step 3: Get the Right Loan

You know the price you're looking for. Now, you need to decide on financing. Most people want to buy, but you can also lease. Jump to our lease section if you want to consider leasing.

If you get a loan, don't go to a dealer. Get a loan from your bank or credit union. If you have no credit or bad credit, there are a couple of things you can do to help you get a loan from a bank: (1) save for a larger down-payment; (2) get a cosigner. You should try at all costs to avoid getting a loan through a dealer. If you have to, make sure you get the best terms possible. The dealer has instant access to your credit. If you're in the military, the dealer also has instant knowledge of your income. It is better to settle for a smaller loan -- and a used car -- than to pay for a better car with a loan at unfair, outrageous rates. Period. If you do get a cosigner, keep in mind that if you default, their credit rating would be hurt too.

What's a good interest rate? No more than 10%. How expensive your car is should have NO bearing on the interest rate. Period.

Step 4: Go to the dealer

You know the car you want, and all of the features. You know the price and have your loan in hand. Now go to the dealer armed with this information. The only missing link is knowledge of their techniques and scams. Many car dealers are honest and straightforward. Some are not. Some prey on service members, especially younger ones. Jump to our section "Tricks of the Trade" and learn about the scams.