How to avoid car-financing traps

NEW YORK (CNNMoney.com) -- With all those cool cars at the Detroit Auto Show, it's tempting to start your search for a new set of wheels. But before you step foot in a dealership, you need to know how to avoid car financing traps.

Those $0 down, 0% interest, and zero payments may sound great. But at the end of the day, it's all advertising.

First of all, only about one third of buyers who apply for 0% financing actually qualify for it, according to Steve Schooff of Capital One Auto Finance.

The people who do qualify have top notch credit. We're talking scores over 750 generally, says Rob Gentile of Consumer Reports.

And don't forget, these are incentives by the manufacturer, so make sure you get some freebies from the dealership too.

Your weapon against dealership antics is to secure independent financing before you go to the showroom.

There is less game-playing when you apply for a car loan at a local bank, online or at a credit union, says Philip Reed of Edmunds.com. Check out Bankrate.com to review rates at a number of lenders.

The upside is that the lender has to meet or beat that rate. And if the local bank has given you a specific loan amount, the dealer can't focus entirely on the monthly payment.

And monthly financing is where dealers will try to take the most advantage of you, according to Reed.

Think about how long you're going to keep the car when you're considering financing. You don't want to pay off your car in six or seven years if you generally only keep cars for 5 years.

There's no reason to pay for a car you don't even drive anymore. Over time, that money can really add up.

When you negotiate, make sure you do it in three parts. First, negotiate the final vehicle price. Don't get caught up in the monthly payment. Check out the bottom line price. It may be hundreds or thousands below the invoice price.

To do your homework, check out ConsumerReports.com and Edmunds.com. Then you'll want to negotiate your financing. This is where you can focus on just how much you're able to spend per month.

Experts say your monthly car payments and related expenses should not exceed about 20 percent of your monthly net income. And finally, don't forget to negotiate your trade-in value.

The dealer is going to try and get you to buy into the bells and whistles. Here are some examples of things you won't need: The extended warranty.

As long as you're not buying a lemon, you won't need the extended warranty, says Gentile. Basic warranties have become more generous.

Plus, dealers make a ton of cash from these things he says. You'll want to avoid "package protection" deals. This means the fabric or the dashboard has been cleaned with a protective cleaning fluid.

And forget the charge for etching in the VIN, or vehicle ID number. You can usually get this service free from your local police department.

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