Many questions arise when it comes time to buy or lease a vehicle, especially if it’s your first time around. After all, a new vehicle may be the first big expense you take on. It’s a good idea to prepare yourself from the outset so you’ll know exactly what to expect before you make this financial commitment. To help you make sense of the process, we’ve gathered the following auto finance tips with the help of Mike Kane, Vice President of Consumer Credit Operations at Ally Financial.

Create a Budget (and stick to it)

Before you get into the nitty-gritty details of your vehicle financing, you’ll want to have a good idea of how much you can afford to add to your budget. recommends making a detailed list of your monthly expenses to see how your monthly auto payments would fit into the mix. You should have enough wiggle room to be comfortable, keeping in mind that your auto expenses aren’t limited to your monthly payment. You should also leave room for expenses such as maintenance, insurance, gas, oil changes and tires.

Do Your Homework

First things first: When you make the decision to buy or lease, it’s time to do some research. There are many resources and free online tools­—like payment calculators or vehicle valuation guides—that can help you when it’s time to negotiate with the dealer.

“To make wise decisions, it pays to understand the tools available to educate yourself on financing a vehicle,” says Kane. “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.”

Consider Your Payment Options

When you’re thinking about how you’ll pay for your new car or lease, you’ll want to know all of your options so you can choose what works best for you. Your choices range from paying in cash to applying for a loan to negotiating a retail contract or lease through a dealership. When financing the purchase of a vehicle, remember that the total amount you pay during the life of the contract will depend on several factors, including the cost of the vehicle, the amount you choose to finance and the annual percentage rate (APR). To learn more about your available options, contact your local dealership.

Determine the Length of Your Contract

A key component of your financing contract is the length of the term, which can typically range from two to six years, or longer. However, according to, the longer you take to pay off your car, the greater the amount you’ll pay in financing charges. Yes, your payments may be lower, but your total cost to finance will increase. The length of your retail contract may also impact your options to trade in or sell your vehicle, since there’s likely greater demand for a five-year-old car over a seven-year-old car. The most important thing you can do, however, is to choose the terms that best fit your financial situation.

Don’t Be Afraid to Negotiate

According to Kane, the terms of your financing—such as the APR, price of the vehicle, down payment, monthly payment amount and term—may be up for negotiation. It doesn’t hurt to ask your dealership about any incentives they offer, such as cash rebates or low APRs.

For more auto-related financial information and for free resources such as a budget worksheet and an auto finance calculator, visit

Remember, vehicle financing is not a “one-size-fits-all” transaction. It’s a process by which you make a series of choices to get the most for your money. Improving your financial knowledge can only serve to help you—and your pocketbook—in the long run.