It can be exciting to purchase a new vehicle. It doesn't matter if the vehicle is brand new or slightly used -- it is new to you. However, unless you have faithfully saved, you will need an auto loan. That isn't quite as exciting.

However, you can make the entire process go smoothly. By being prepared, you eliminate a lot of the stress from the lending process. You know that you can afford the car you pick out before you sit down in the dealer's office. That is a good feeling.

First, you need to know where you stand credit-wise. Know what your credit report says and where your credit score is. If there are any inaccuracies on your report, you want to fix them before you try to borrow money. A lower score will result in higher interest rates.

Years ago, I had a dealer tell me that I didn't have very good credit, so I didn't qualify for the best rates. But I knew that I had a near perfect credit score, so I took my business elsewhere and got the prime rate. If I hadn't been aware of my credit situation, I may have paid thousands of dollars in unnecessary interest.

The chances of finding a lender or a dealer that tries to make you take a higher rate loan are not as small as you may think. I have encountered national lenders (some that advertise their products quite heavily) who offer the "best rate possible." This best rate actually turns out to be much higher -- up to 4% higher -- than the current rate for borrowers with perfect credit. The assumption is that you won't be shopping around for your loan and will take whatever they quote you. Don't be fooled into thinking that lenders must give your a quote for the best rate you apply for. Many lending agents get bonuses for getting you to accept a higher interest rate than you qualify for. It is essential that you shop around.

You need to know exactly how much you can afford to spend on your new vehicle. Don't forget to consider the additional insurance costs, gasoline costs and maintenance bills. And don't forget tag, title and tax. Use an online car payment calculator to figure out what your monthly payments would be. If it doesn't fit into your budget, you have to spend less. One quick way to tell if you can afford a vehicle is to compare it with what you have right now. If you are already financially strained, you can't afford a higher vehicle payment.

You need to look at the big picture, not just the monthly payments. Look at what you are paying for the vehicle and at the overall costs of the loan. Getting a good deal on a vehicle doesn't mean that you won't pay for it in the long run.

Many borrowers choose to make a low downpayment or none at all. It is easy to fit into their current budget -- nothing up front. However, the total cost of your loan is increased because you are paying interest on a larger amount of money. In fact, the choice means that you will probably be upside-down on your vehicle for years to come -- you owe more than it is worth. A downpayment is also a wonderful way to get a good interest rate. It shows that you will not default on the loan.

Check around with different lenders before you even visit a car lot. Call your local credit union and bank. Look at a few online lenders -- though be cautious in giving out information to anyone you don't know. Many times, the car dealer won't offer you the best auto loan. Have outside financing, let the dealer know you have outside financing and ask if they can beat the rate. Despite what I've always heard, in the past three auto loans I've received, the dealer was able to beat the bank's rate every time. Having outside financing shows that you have your ducks in a row and gives them something to compete against. You have the added security of knowing what is fair and bargaining power is always a good asset.