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What to consider before buying a vehicle

In an effort to move cars off the lot, many car manufacturers offer special discounts and incentives, mostly on new cars.

Incentives vary, but usually include cash back in any amount from $1,000 to $5,000, an amount that you can use as is or add to your down payment. Special discounts can include premium packages of options offered at a discount and special financing offers.

Do you qualify for 0% financing?

A popular financing special deal is 0% financing. While this offer may lure buyers into a car showroom, it is generally only available to borrowers with excellent credit. If your credit score is less than 700, or in some cases less than 750, you won't get that rate.

If you do qualify, zero percent financing means that your entire monthly payment will go toward paying the principal on your loan and that you won't incur any interest charges throughout the life of the loan.

A luxury sports car sits on display in a dealership in Manhattan on November 30, 2017 in New York City. (Photo: Spencer Platt/Getty Images)
A luxury sports car sits on display in a dealership in Manhattan on November 30, 2017 in New York City. (Photo: Spencer Platt/Getty Images)

Do your research before you shop

When negotiating your purchase, it is advisable to do some research about the make and model of car you want to buy before visiting the dealership.

By doing research on the Internet and consulting consumer sites with information on car prices, you can know how the manufacturer has priced the car and what types of dealer markups have been added, so you can negotiate those down as low as possible. Generally, the dealer markup is called ADP (additional dealer profit) or ADM (additional dealer markup) on the price sticker on the side of the car.

The Internet is useful for loan rate and length comparisons. Many consumer finance websites offer loan rates from numerous sources and allow you to search by your location so you can compare what types of loans are available in your area to those available from online sources.

Dive deeper: How to finance buying a car

This content was created in partnership with the Financial Fitness Group, a leading e-learning provider of FINRA compliant financial wellness solutions that help improve financial literacy.

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