What's your driving pleasure…a powerful truck, a luxurious sedan or a colorful sports car? There are a myriad of questions in most car shopping experiences pertaining to which make, model, color, and options to buy. But what about questions pertaining to what you can afford, what interest rate you will pay, and whether zero percent or cash back is the better option? Buying a car can be a frustrating process. You should be well aware of the fundamentals of auto financing and the process of getting a car loan.

A car loan is usually a large lump sum of cash granted by a financial institution for purchase of your car. For many households, auto loans are a necessary part of life. Frequently, people decide how much they will spend for a vehicle based on the highest loan amount and longest repayment period they can obtain. The situation in the car financing industry has historically been less clear with the relative increase in the variety of funding sources. More efficient funding methods have been based on the credit worthiness of the customer and not on the bank.

Generally, there were two types of lenders in the automobile financing business, banks and captive finance companies. Captive finance companies are essentially lenders owned by an automobile manufacturer. The business of captives is to provide financing for customers through dealerships. On the other hand the banks both small and large view automotive financing as another service to their customers and also a consumer credit dimension to their portfolio. In this competitive market, the emerging Internet lenders offer another form of direct lending.

Whether purchasing or refinancing your automobile a lower monthly repayment rate is obviously what you will look for. Once you've found your vehicle, go to the dealer offering the best deal. Often your best deal could come from taking the dealer rebate and financing your vehicle through proper channels. Know ahead of time what you're willing to pay, whether or not you want an extended warranty or options, and, most importantly, be prepared to negotiate with your dealer.

Car-dealer fraud is on the high rise. The tactics being used are so sly that even informed consumers who do their homework are being taken for hundreds, and often thousands, of dollars. These scams add many millions of dollars each year to the profits of car dealers at the expense of consumers. So it is extremely important that you know what you plan to spend before you shop.

Planning your auto purchases properly over the long term in a way that enables you to stagger your loans, save on interest, and even set money aside for your next down payment can help you avoid straining your budget and stressing yourself. Never make the mistake of rushing into buying without thinking. Dealers are concerned about their profits, not your budget. Seek out actual transaction prices, dealer invoices, resale values and incentives. Resist the pressure to buy, slow down, and get into the details. Ask lots of questions about what is contained in the price, the limitations, and exclusions of any services or products.

Winning at the car buying game doesn't take any special expertise or university degrees, just common sense and a bit of time and effort. Never get baffled by the warranties, extras, free insurance, part-exchange prices, road tax and other great assurance put by the dealers. Learn your auto financing options and get the best deal on your new or used car loan.