When you go to a car dealership to negotiate for a new car, you're in a stronger position if you have a loan pre-approved. Unless your model has a special low-rate financing offer backed by the manufacturer, a local bank or credit union is likely to give you a better deal on a loan. And in most cases, you can take a rebate in place of any low-rate financing and use that to lower your purchase price.

Credit unions typically charge one-half to one percentage point lower interest than bank car loans. You may have access to a credit union where you work, or you may be eligible through a professional organization (teachers, government employees).

If you don't have ready access to a credit union, check out your local bank offerings. Websites specializing in loan information will give you a quick rundown on average rates and the best rates in your area. HSH Associates gives you one car-loan rate per city -- among the best found for each location in their survey. Bank Rate Monitor gives five or more quotations for each major city, including the lowest rate available.

When you get a pre-approved loan, that commitment usually is good for a month or more. So you can shop for the car you want knowing your financing is ready to go.

In addition to getting financing before you go to a dealership, you also need to do your price homework. That's our next lesson--setting your target price.