Buying or leasing a vehicle is an exciting decision. For many consumers, it’s the first “big ticket” item they acquire. Knowing what to expect before making this important financial commitment will help you feel confident about your decision for years to come.

“To make wise decisions, it pays to understand the tools available to educate yourself on financing a vehicle,” says Mike Kane, vice president of Consumer Credit Operations at Ally Financial. “The internet has made it easy for shoppers to access these tools, which can help you get the most for your money during the financing process.”

This April, which is Financial Literacy Month, Kane is offering some auto finance tips to help you make sense of the process.

• Ways to Pay. There are a few different options when it comes to buying or leasing a vehicle, such as paying cash, getting a loan from a bank or credit union, or negotiating a retail contract or lease through a dealership. It’s important to choose the option that works best for you.  Visiting different dealerships is a way to learn more about the options available.

• What to look for. When financing the purchase of a vehicle, the total amount you pay during the term of the retail contract will depend on several factors including the price of the vehicle, the amount you finance and the Annual Percentage Rate (APR).

• The length of your retail contract matters. Retail contract terms typically range from two to six years, or longer. The longer you take to pay, the lower your payments will be, but your total cost to finance will increase. The length of your retail contract may also impact your options to trade in your vehicle, should you have an outstanding balance. Choose the terms that best fit your financial situation.

• Negotiation may be part of the transaction. The terms of the financing — such as the APR, vehicle selling price, down payment, monthly payment amount and term — may be negotiable with the dealership. Ask about any incentives the dealership offers, such as cash rebates or low APRs.

• Do your homework. Using free online tools like payment calculators or vehicle valuation guides will give you the information you need when it comes to negotiating with the dealer.

• Stick with your budget. There are ways to stay within your budget after all the negotiations are over as well. For example, once you have your vehicle, you’ll need insurance. To get a lower premium, consider increasing your insurance deductible, should it fit your financial situation.

For more auto-related financial advice and for free resources, visit www.allywalletwise.com.

Remember, there is no one “right” way to finance a vehicle; only a series of choices you can make to get the most for your money. If you’re planning to finance or lease a vehicle in the near future, improve your financial knowledge to better understand the process.

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