It is definitely worth being prepared.

Key points

• Car payments can be a huge strain on your budget.
• It’s important to figure out what you can afford and research borrowing options before looking at cars in person.

Many of us need a car to function. But owning a vehicle can be an expensive prospect. You have to feed it, to assure and process monthly payments if you end up funding it.

And many car owners do end up financing vehicles because they don’t have a lot of cash lying around. If this is the boat you expect, don’t worry. But also, don’t just walk into a dealership unprepared. In fact, it pays to take these essential steps, as suggested by Your rich best friendbefore going to see the cars in person.

1. Check your credit score

Your credit score indicates how trustworthy or risky you are as a borrower. From now on, there is no longer a minimum credit score required to finance the purchase of an automobile. But the higher your credit score, the more the terms of your auto loan are likely to be. And a higher credit score can make you pay significantly less interest on your car loan, allowing you to better manage your monthly payments.

As such, it’s important to check your credit score before looking at cars. If you see that your score needs work, you can take a few steps to improve it before you apply for an auto loan – and end up with an unfavorable borrowing rate that drives up your costs.

2. Determine how much you can afford to borrow

It’s easy to get tempted by a car with great features. But if buying that car means signing a car loan with monthly payments of $750 and the maximum amount you can afford is $450 a month, then you’re taking a really big risk.

Before heading to a dealership, sit down and check your budget (or make one) to see how much car payment you can swing. Remember, you don’t want to mess with a car loan because then you might fall behind on other bills, like your mortgage or utility charges.

3. Shop around for financing

If you know you’ll need a car loan to finance a car purchase, don’t rely solely on the financing figures given to you by the dealership. Instead, shop around to see what options you might have. You can research different lenders online to see what their loan rates look like.

4. Ask for pre-approvals

Just like you can get pre-approved for a mortgage loan, you can also do it for a car loan. This will give you an idea of ​​how much you can afford to borrow.

Now, if you’re planning on shopping around for pre-approvals, be sure to do so within the same 14-day window. Each time a lender digs into your credit history, it counts as a thorough investigation of your credit report.

One serious inquiry can drop your credit score a few points, which is usually not that bad. But you don’t want multiple difficult requests in a short time. However, if you shop for the same type of loan within the same two-week period, these various difficult requests will only count as one.

The more you prepare before entering a car dealership, the more likely you are to land a good deal – and the less likely you are to make an auto purchase you will end up regretting.