When you’re ready to buy a new car, it’s important to understand how financing works. It can help you determine the best model and price while staying within your budget. You can also find out which lenders offer the lowest interest rates and terms for different credit profiles.

If you have bad credit, it can be harder to obtain an auto loan, though online lenders specialize in providing loans for people with less-than-perfect scores. If you have some wiggle room, saving a down payment may help you qualify for better loan terms. This can lower your monthly payments and interest rate, as well as reduce the risk to the lender.

Some people prefer to lease their vehicles rather than purchase them outright. A lease allows you to drive a new car for several years, and you can often upgrade to a newer vehicle at the end of the lease term (generally two to three years). However, keep in mind that when you lease a car, it’s not yours until the debt is paid off.

When negotiating, focus on the total price of the car rather than the monthly payment. Dealers will often manipulate the numbers to meet a target monthly amount, but this can mean you pay more in the long run. Also, choose the shortest term length that fits your budget. Choosing a longer term will increase the cost of the vehicle because you’ll be paying more in interest charges. car finance