Last year I got into a major car accident and my car was totaled. For about 2 weeks I was in a rental car courtesy of my insurance company, but that went sour when I got a call on a Friday afternoon saying that my rental car was due the following Monday. I had a deadline: I had to test drive and buy a car in 3 days.

These are the steps I took to buy and finance a car in three days. Did I mention I went by myself? By the way, I look like I am 16 so just make sure you are informed and I’m sure you score huge!

• Get a recent copy of your credit report. There are currently 3 credit reporting agencies: Equifax, Experian, and TransUnion. Your credit score determines what kind of interest rate you qualify for (the better your credit score the better (and lower) your interest rate).
• You are also entitled to a free annual credit report at annualcreditreport.com (or by calling 877.322.8228), this is a credit reporting website jointly operated by the 3 credit reporting agencies mentioned above. If all this internet stuff freaks you out go here to www.ftc.gov for an actual form or for government endorsed info. (Please note you should be checking your credit regularly). Note: the information between the three reporting agencies can widely.

This is the LEGIT site. Don't be fooled by impostors!

• Take your score and look at it. Is there anything you can work on to improve your score before buying your car? Paying off/ or paying more than the minimum due on your installment loans and revolving balances can add points your credit score if you have a few months time before purchasing your car.
• Once you are financially sound: you got your credit score and it looks good, you have started saving for your down payment for the car, and you have figured out if you want to go with new or used car? (Don’t look at your car as an investment, cars depreciate too fast to be considered an investment. Used cars depreciate less because you buy them for less moola. However, used cars are not for everyone.)
• Find out how much car you can afford. I did this by first applying for an auto loan with my bank, Bank of America. I figured they would give me a pretty good parameter of how much car I can actually afford, since they know how much I deposit and withdrawal. With the amount that BofA quoted me, I chose to go the conservative route (since at the time people were getting pre-qualified for way more than they could afford *cough cough the housing crisis*). I took the amount that I was pre-qualified for and reduced it by $3000 to make sure my monthly payments wouldn’t wipe me out. Getting your car repossessed can’t be fun.
• After looking at Bank of America’s high interest rate I chose to shop around for better interest rates than what BofA had offered me. If you do all of your inquiries all at once, it does not affect your credit score. So try to shop around all at once.
• I headed to www.bankrate.com to finish my search for the oh so low interest rate that I deserve. It is extremely important for you to get pre-qualified for a loan before stepping inside a dealership. (Dealerships bring in a lot of money by screwing the people they finance, in- house or by brokering deals to other banks). I use www.bankrate.com to find out what the auto rate interest rate for the day is. (Interest rates fluctuate much like the stock market, so make sure you are getting a competitive rate by checking www.bankrate.com). Here is an example:

36 month new car loan		6.71%		6.70%
48 month new car loan		6.50%		6.49%
60 month new car loan		6.51%		6.51%
72 month new car loan		6.44%		6.44%
36 month used car loan		7.08%		7.07%

• Type in your zip code and a whole bunch of banks that service your area will pop up. You can do a sort by interest rate or discounts with automatic debit bill pay. (After BofA’s outrageous interest rate I chose Capital One for my financing, they sent me a blank check via overnight mail). And looking on bankrate.com today, Capital One has the best rate at 5.54% for new car financing, term 48 months.
• Remember you are trying to get the lowest car price at the dealership and the lowest interest rate from a bank that will qualify you. Goal: You want to win not lose to the “man in the financing department”.
• You might also want to try credit unions, they usually have better interest rates than your regular big brick and mortar bank such as Bank of America. Why? Credit unions are cooperative (members only) financial institutions, and low financing rates are a perk.

• Now that you have all the financing out of the way, aren’t you relieved? You can now chose a car that fits your $$$ parameter. Since I only had 3 days to test drive and buy a car I headed over to CarMax (since they have all makes and models of cars) to test drive about 15 cars that were around my price range (or what I was pre-qualified for).
• I picked 1 car out of the 15 cars I test drove and went straight to the dealership the next day. Note: if you have your eyes on a few cars call your insurance company and get quotes on how much your insurance will be. This might help you narrow your choice if you are torn between two- three cars. After all do you really want a car that is going to cost $4000 a year to insure?
• If you are looking at used cars Carfax.com is a great resource. You can get the vehicles history before you buy. Some dealerships will give you a carfax.com report for free but private sellers might not. You can always subscribe for a month.

• Talk car first, talk financing later. Pick the car you want and mentally set the price you are willing to pay for it. Get them to agree to a compromising price before crunching numbers at the financing department.
• But don’t sweat it, you are savvy! You don’t need their financing because you are PRE- QUALIFIED already. Remember your goal is to talk salespeople down, whilst they are talking you up. ALWAYS LOW LOW LOW BALL so you have more room to compromise to your advantage. The salespeople are always going to HIGH HIGH HIGH BALL you. Low ball so you have more room to barter and meet at a price point that is closer to what you want. Negotiate your brains out! Haggle the salesperson to get the best deal, the worst they can say is NO. (Like you didn’t hear that enough from your mom growing up).
• I haggled and haggled I even had another dealership on the phone with me negotiating a car that I had previously looked at. As we were slowly chipping away at the price. My friend was online at home looking up market prices and MSRP (be aware of wholesale and retail prices on cars) on Kelly Blue Book and Yahoo! Autos, just to make sure they didn’t pull a fast one over me. Apparently it worked.

• Also, don’t let them know how much you can afford in monthly payments. Unless you are really savvy with a financial calculator, the dealership will most likely rape you once you give them this number. My blank check came in a booklet and it had helpful parameters such as: $30,000 car for 48 months would be $560 payments monthly. (This is what I used as a reference point to see what my monthly payments would be).
• Toward the end, however, the dealership wanted to run my credit report (note: they need your permission to run your credit). Being the bargain shopper (with good credit) that I am I had them run my credit report to see if the dealership would beat my financing with Capital One. The dealership beat Capital One’s interest rate. If I wanted to be really thorough you could have called Capital One to see if they would beat my dealership’s interest rate. =D
• Read everything before signing and make sure they don’t add any extra fees onto your invoice. Ask to borrow their calculator when in doubt.
• I walked out of the dealership with a car that was below market price. Oh, how I love saving money! I WON! Or at least I think I won.

Additional resources:

Forbes/ Yahoo

Auto: How Stuff Works

Fool.com

BankRate.com