10 common car loan mistakes that cost you money

Preapproval will help you get the best rate available and give you leverage to negotiate at the dealership.

Consider the overall cost of an auto loan in addition to the monthly payment — and don't clue the dealership salesperson in on your budget too early.

Shop around with many different lenders to get an idea of your estimated interest rates and take any steps to improve your credit score before going to the dealership.

With new and used car prices continuing to rise, it's more important than ever to get the best deal on a car loan that meets your short- and long-term financial goals. A little extra planning could help you strike a better deal on the out-the-door price of a new car. Taking more time to compare auto loan rates along with a few other budget-savvy steps could save you money so you don't erase the savings negotiated on the purchase price.

Before you start car shopping, ask yourself a few questions about your finances — and answer them honestly.

How much can I really afford? Take a look at your spending habits to see if there are any avoidable expenses eating up your paycheck. You may need to cut back or eliminate some depending on how much your new car payment is.

How much of a down payment can I make? A down payment will help you negotiate a lower price and reduce the amount you need to finance. Use an auto loan calculator to see how a large down payment impacts your total cost.

Can I cover maintenance and emergencies? Oil changes, tire rotations, new brakes or a late-night breakdown are necessary costs that come with owning a car. Make sure your budget can handle them without using a credit card or taking out an emergency loan.

How much will my insurance be? If you know the make and model of the car you plan to get, find out how much the insurance will be. Auto insurance premiums have been on the rise in the past few years, and if you haven't bought a car recently, the premium sticker shock may surprise you.

What is my credit score? Auto loan lenders are more likely to approve your application and extend low interest rates if you have excellent credit. If you have bad credit, you may have a more difficult time finding approval, but you may still be able to access bad credit auto loans .

Dealership financing can be an easy and convenient way to get a car loan, but dealers often mark their rates up by a few percentage points. Before heading onto the high-pressure sales floor, get a few auto loan quotes from banks or credit unions. This can help you haggle with the dealership's finance department.