CNN Money: Buyng a car - Shopping for money

Having a loan approved in advance lets you focus on price negotiations.

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 percent lower interest than bank car loans. You may have access to a credit union where you work, or 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. Web sites 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. gives five or more quotations for each major city, including the lowest rate available.

Capital One Auto Finance offers what is called a "blank check" auto loan. The company will approve you, online, for an auto loan and provide you with a check to be used for the purchase of an automobile.

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.