Most of us, when buying a car, fall in love with it and forget about financial nuances. This factor may play a nasty trick on you, especially when getting a car loan. How to escape mistakes? Let's analyze the most widely spread of them.

1. Mistake number one is when people first search for a car and choose credit conditions afterwards. Automobile sales center staff may offer you to get a car loan right there. And, as a rule, this offer is much more beneficial than the one you can get directly in the bank.

If you want to apply for best credit, try to consider that the cost of a car in the end of the repayment period loses its original cost. In average, a car becomes 10- 15% cheaper when a car owner leaves the sales center. For comparison, think about the case with real estate market. Such situation is usually called "upside down", i.e. when you pay for a car more than it costs in reality. Apparently, the best way is to choose a loan first and then to buy a car.

What annual percentage rate for a car loan is considered acceptable? Certainly, the smaller, the better. There are some specialized web sites, where you can check your credit report for free and where you can find out what rates you can expect. Banks give low APR to people with good credit history.

2. Mistake number two - borrowing of a too large sum, and payments that you can't handle. The solution is really easy - take a calculator, a pen and a paper, sit down and make an estimate of your monthly budget. What sum is comfortable for you to pay every month? How the purchase of a new car agrees with your budget?

3. The third mistake - signing a credit for a very long term, and no opportunity to discharge it ahead of schedule without paying a prepayment penalty.

Credit insurance is not a mistake. However, it's entirely up to you whether to obtain insurance for your credit or not, except the otherwise is provided by the creditor.

Usually they offer two types of credit insurance. Credit Life Insurance covers all the costs in case of death of a credit holder. These costs are the debts, which are left unpaid on the death date. Insurance company will pay this difference and the car will belong to the relatives of a credit holder.

The second type of insurance - Disability or Accident and Health. The costs will be covered during all the time you can't work, are sick, or got into an accident. Usually, the insured person must be staying disabled for at least 15-30 days, depending on the terms of insurance company.

Future car owners ask creditors very few questions. Or ask the wrong questions. It's worth mentioning that dealers, as a rule, give a 100% guarantee, even if you don't have good credit history. However, if you decided to get a car loan - ask more questions about credit terms. The approximate questions you should ask a creditor are:

• What is your APR?
• What is the period between monthly bills?
• What is the repayment period?
• Is there a prepayment penalty?
• What is your minimum monthly payment?
• What sum will you end up with eventually, if you make only minimum monthly payments?
• What dues and fees you have to pay when signing for a credit?
• Do you have to get credit insurance and how much does it cost?
• Do you have down payment?
• What documents you have to collect?

Keep this list in mind when you are getting a car loan.