Applying for and receiving an auto loan is a relatively easy process, even if you have bad credit or bankruptcy on your credit report. There are mountains of lending institutions that will give you very attractive rates on an auto loan, even if you have bad credit or a late payment history.

Obviously, the cleaner your credit record, the more attractive the rates will be. With the price of new cars these days, the difference of a couple of percentage points on a car that costs $30k or more can add up to several hundred dollars over the course of the loan. In that light, you may want to take the time to get a copy of your credit report and review it. This is particularly important when you consider the fact that the majority of consumer credit reports have errors in them, which in turn lead the credit bureau to produce a credit score for the consumer that is lower than it really should be without the errors. You have a right (and also, many say, a DUTY) to dispute those errors on your credit report so that your credit score is as accurate as possible.

The next thing to consider about the terms of your auto loan are how long you wish to finance the car for. Again, with the price of new cars being so high these days for a nice car, some loan companies are allowing up to 72 months (6 years) or even more in some cases to repay the loan. While this makes the monthly payment appear to be extremely attractive and affordable, keep in mind that you do NOT want to get into a situation down the road where the car is falling off the tires and you still have a year or more of payments to make on it. Gauge the number of years to take out the loan for, and then estimate realistically the number of miles that you will likely drive in a year. For example, if you estimate that you will drive 25k miles per year, do the math - that car will have 100k miles on it at the end of just 4 years, and will also likely have almost no trade-in value.

Now be aware of the "game" that car dealerships play with the base amount. You want to feel that you have gotten a good deal on the car, no doubt about that. So you haggle and negotiate with the car salesman to arrive at a price, where that price is significantly below what the window sticker says the car should sell for.

But that is not the end of the story. You have probably gone online and found the trade-in value of your existing car. If your existing car is somewhat late model, and realistically in "fair" condition (not "excellent" and perhaps not even "good"), there are places online where you can find out what the dealer should give you as a trade-in value on that car.

But what the online sites do not tell you is that you can expect that much trade-in value on your existing car if you are paying sticker price for your new car. But you should never pay sticker price for your new car! Let's look at an example.

Say the new car you want has a sticker price of $35k and you found online that your existing car in "fair" condition should be worth $5k on a trade-in. That means the new car will cost you $30k. If you pay sticker price, that is probably the way the deal would work out. But if you negotiate the price of the new car down to say $32k, now the dealer will only give you $2k for your trade-in, despite what your online source says you should get as trade-in value on it. The end result is exactly the same - the new car is going to cost you $30k.

Be realistic about how much you are going to finance for your new auto, how long you will take the loan out for, how much can you comfortably afford to put down on it so that you are financing less, then factor in the realistic trade-in value for your existing car, and after all that is done, THEN you have a figure to work with when shopping for your new car financing!