Initially, be careful with your choice of the car.  If you’re looking at cars in an investment light, seek cars with a high resale value.  While it’s true that every car begins to lose value as soon as it rolls off the lot, choosing a car with a good resale value will make this a bit easier.

Also, consider a used car that’s at least two years old.  Thirty to forty percent of an automobile’s depreciation occurs within the first two years.  Past that period, the loss is manageable and can be easily exceeded by regular payments.

Another tactic is to make as large a down payment as possible.  Use the old twenty percent rule as a base and then try to go over that by as much as you’re comfortable with.  The more you put down on the front end, the farther you’ll be from the “upside down” state.

You can also look at the terms of the financing.  Go for as short a term as possible, with the highest payments you can swing.  This way, there’s a monthly step that you can take that will continually put you in a better situation.

If you do find yourself upside down on the loan, keeping the car a bit longer than you originally intended to can be enough to reverse this situation.  The closer you are to paying off the car, the more value you have in the car, since you’re paying more to the principal than on interest at the end of your loan.

A bigger risk when you’re in an “upside down” loan is what would happen if the car were totaled in a wreck.  The difference between what you owe and what the car was worth would fall to you.  For this reason, you should consider gap coverage, which will cover the difference between the value of your car when it’s totaled and your outstanding loan balance.  Remember, you’re responsible for paying that difference even if your car is a complete wreck

You should know that, depending on where you live in and the type of coverage you have, your insurance deductible may be covered too.  Gap protection isn’t exactly insurance, though that’s what most people call it.  Strictly speaking, it’s a debt cancellation agreement – it waives the part of your financing agreement that makes you responsible for the difference between the value of your totaled car and the loan balance.  No matter what it’s called, this protection will satisfy your liability.

However, gap coverage is a big step that you may not need.  If the difference between your car’s value and what you owe isn’t that big – say one and a half times a monthly payment – you may be fine if the car is totaled.  In any event, this coverage will only go into effect if a car is a total loss, so you’d still be on the hook for most repairs and minor damage.

Particularly on high quality domestic vehicles, the loan rates and other incentives make it a great time to consider a new car.

For those auto shoppers who have suffered downturns in today’s difficult economic circumstances, it can be difficult to get new car loans. The rates and terms offered may be as bad as those offered at any other time.

It’s possible that they will be even worse, in fact, as underwriters and financiers are reviewing repayment ability more carefully than they have in the past, and are more likely to ask for verifiable documentation of current income and other evidence of the ability to repay before they offer a loan.

But for those who are weathering the economic times with good credit intact, the opportunity is perfect for the purchase of a new vehicle. New car loans may have very favorable terms, even if the days of zero interest and easy  credit are past for the time being.

One of the first stops you’ll want to make on your journey toward buying a new car is the automobile purchasing sites like Edmunds.com, CarsDirect, or Autos.com. These sites, among others, will help you find out what a dealer pays for the new car that you want to purchase. This information can help you when it comes time for a purchase. It also gives you negotiating power.

The next step you’ll want to take is to look for the best rebates and factory cash incentives that you can find. If you’re getting a new car loan anyway, make sure to make it the best deal you can by getting a rebate or cash incentive.

If you look to FightingChance.com and Edmunds.com before you go to the dealer, you’ll get a heads up on the rebates that are available, and will be in a good position to make sure you benefit from the offer and not just the dealer.

There are rebates of between $3,000 and $6,000 on some vehicles, and even typically conservative Honda, which has not needed rebates in the past, is offer rebates on some vehicles.

Since dealers are having a challenging time currently and are unable to offer the same kind of interest rates as they have in the past, it’s a good idea to get a credit report that includes your personal FICO score before you visit the dealer.

You can find your credit score at Experian, Equifax, or TrueCredit.

If you have the information about your score, you can be sure that you get the interest rate you deserve. The interest rates for those with credit scores below 700 are going to be higher than those over 700.

Checking at the dealer for their interest rates and terms, then going to your credit union or bank and checking their terms, then going to online sites for quotes will ensure you get the best possible deal on your new car financing.