Finding Funders Online

Now it’s time to do the hard work of sourcing out grants for your NGO. Thankfully, the Internet has made this task easier—and cheaper for NGOs who also wish to maximize their resources. You only need to use your computer with an Internet connection to search and even apply for funding.

There are two types of international funders:

1) Corporate and

2) Independent.

Corporate foundations are formed using funds from a company while independent foundations are those that are formed by individuals, a group, or family. If The Foundation Center (http://www.foundationcenter.org/) is the main resource in the United States, similar organizations also exist in other regions in the world. The main ones are The European Foundation Centre, Imagine Canada, United States International Grantmaking, and Grantmakers without Borders.

The European Foundation Centre (http://www.efc.be)

The European Foundation Centre (EFC), based in Brussels, Belgium, is composed of international foundations and corporate funders. In its database, you can search more than a thousand of these potential funders that work in or have an interest in Europe. However, you have to pay an annual membership fee of 5,000 € to access the profiles of the funders there. You need to become a member because the EFC only supports the work of its members and does not give grants or any kind of financial support nor does it provide services directly to grantseekers.

When you already have subscribed to EFC, you will have access to the members-only area of the website where you can update your organization’s profile, view the full profiles of all EFC members, submit a request for information, and find contacts in the funder database. One of the best ways to make full use of the EFC’s vast plethora of resources for potential international funders is to study the funder’s profile carefully. The reason why reading their profiles is important is because you can find if your organization treads on common ground with a corporate funder who might be willing to give you the monies you need.

A funder’s profile gives such a fertile ground of information that will help you decide if they are worth making initial contact. A funder’s name (both in English and another language), location, its primary address and contact person, mission, background, geographic focus, related organizations, program areas, types of support given, application procedures, restrictions, accepted languages, type of funder, legal status, and other important information about its staff and budget can be found in the funder’s profile.

Take a very careful look at the program areas that it focuses in as this gives you the funder’s area of focus. Usually, the EFC has members that provide funding for those organizations that do work in Central and Eastern Europe, culture, disabilities, education, environment, AIDS/HIV, minorities, and the youth.

If the membership fee is too stiff for your organization as of the moment, the EFC does give you a stepping stone in its Resource centre, specifically the tab that points to “Advice for grantseekers.” You can find links to Websites on Fundraising; European Resources; Foundations and Corporate Funders; Guidance for Nonprofits; and Resources for Students.

Imagine Canada (http://www.imaginecanada.ca/)

Another international subscription-based funding database website, Imagine Canada aims to support and strengthen nonprofits and charities so that these organizations can also give support to the communities they serve. Its members are Canadian charities and nonprofits that work for the good not only of Canadian communities but also of communities worldwide. By becoming a member, you get to engage and network with other members; have access to education and resources; get discounts; and get recognized. A one-year membership costs $550 while a two-year membership fee is $1000.

Perhaps the most valuable resource for organizations looking for potential funders is Imagine Canada’ GrantConnect (http://grantconnect.ca/). This was formerly known as the Canadian Directory to Foundations & Corporations. They call this updated feature an “innovative and comprehensive tool that connects charities with funders who share their cause.”

GrantConnect boasts of four dynamic searches—Funder Search; Quick Look-up; Gift Explorer; and People Seeker. It also has what it calls Imagine Canada Prospect Index which is an algorithmic ranking that gives the best funder matches for each charity. Its Detailed Funder Dossiers allow you to get the most comprehensive information for each listed funder, using multiple data sources to ensure that the information is fresh and accurate.

Subscribers also access a funder’s gift-giving history displayed in interactive tables and Google map. Another equally valuable feature is LinkedIn Connections which enables you to discover key influencers in your network by looking at the LinkedIn connections of the hundreds of funders. Management tools, customizable labels, monthly newsletter, and allowing multiple users from an organization are the other innovations that you can take advantage of if you subscribe to GrantConnect.

United States International Grantmaking (http://www.usig.org/ )

The USIG, a project of the Council on Foundations together with the International Center for Not-for-Profit Law, aims to “facilitate effective and responsible international grantmaking by U.S. foundations. Thus, it basically caters to grantmakers who want to fund organizations based outside the U.S. Still, you can find such helpful resources as country information; legal issues; global disasters and response; and links which, although targeted for grantmakers, are helpful for grantseekers as well.

Grantmakers without Borders (http://www.internationaldonors.org)

Global social change philanthropy is practiced by the public and private foundations and individual donors that are members of Grantmakers without Borders. It has around 160 members to date that gives grants globally. Although this is not a funding organization and therefore does not review proposals from grantseekers, it does give a lot of helpful information for organizations looking for prospective funders. Click on the “advice for grantseekers” tab under the site map and you will find links to international foundations and organizations that give grants as well as other helpful tips for organizations and individual grantseekers.

From the links in these international funders and funding databases, you have access to hundreds of other sources of funds for your NGO. Don’t neglect to search for local grantmakers in the country where your operations are centered in so that you have a whole spectrum of potential funders to apply for monies for your advocacies.

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International Grants for Non-Government Organizations

Non-Governmental Organizations

A non-governmental organization, more popularly known as an NGO, is an organization that delivers programs at a local, national, or international level. It operates independently of government even if the NGO approval is given by the host country where it delivers its projects and/or services. NGOs provide projects in various areas— health, education, food stability, environmental conservation, information, and calamity response, just to name a few. Famous NGOs whose advocacies have made them famous worldwide include The Wikimedia Foundation (information); Oxfam International (humanitarian work); and CARE International (poverty alleviation). However, there are hundreds of thousands of NGOs making a difference around the nation and all over the world.

If you’re working for an NGO, then there’s a lot of good news when it comes to sourcing out funds. You can apply for funding not only from grantmakers in the United States but from foreign governments, foundations, and corporations as well. Compared to for-profit businesses whose funding sources are limited, NGOs are able to enjoy a wide variety of funding sources both in the national and international levels.

Eligibility for International Grants

Before you can apply for funding from both national and international funders, you have to make sure that you are eligible to apply for grants from them. This means that if you are an NGO based in the United States then you have to register as a nonprofit organization with the Internal Revenue Service. The 501(c)(3) status that it will give when you have complied with all the requirements is valid for all the 50 states. Furthermore, this means that your search for funding sources is limited only to grantmakers in the United States. You can pretty much forget international funders if you are operating solely within the country since the focus of these funding agencies is on giving their monies to NGOs with advocacies where they are located.

Now if you are a non-governmental organization with programs in a specific country or countries then you can source out funds from international sources. To ensure that you have NGO status in the country where you are operating in, you have to make sure that you register your organization with the proper authorities there. Follow the rules and regulations in the country where you have your programs so that you won’t run into any glitches when applying for grants. If you’re operating in multiple countries, you do have to follow the policies in each country where you have programs and seek approval letters from each of them.

It’s very important that you keep your NGO approval letters in a safe place. It’s recommended that you make not only physical copies but electronic ones as well of your approval letters and other important documents so that you don’t have to worry if you lose any of them. Approval letters are extremely important since funding applications generally require that these be attached together with other documents about your organization.

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Grants to Expand Existing Businesses

If you already have an existing business, there are federal and state grants that you can apply to. At the federal level, you can check out the Small Business Innovation Research Program (SBIR) and the Small Business Technology Transfer (STTR) Program.

The SBIR/STTR Programs

The SBIR/STTR Programs are intended specifically for domestic small businesses in the field of Federal Research/Research and Development. If you believe that your business has technological and commercial potential then you can try to see if you can qualify. Keep in mind, however, that the competition is very tough. The federal government awards these programs to stimulate technological innovation; meet federal research and development needs; foster and encourage participation in innovation and entrepreneurship by socially and economically disadvantaged persons; and increase private-sector commercialization of innovations derived from Federal research and development funding.

The following agencies participate in the SBIR/STTR Programs: Department of Agriculture; Department of Commerce – National Institute of Standards and Technology; Department of Commerce – National Oceanic and Atmospheric Administration; Department of Defense; Department of Education; Department of Energy; Department of Health and Human Services; Department of Homeland Security; Department of Transportation; Environmental Protection Agency; National Aeronautics and Space Administration; and the National Science Foundation.

There are three phases to the SBIR Program. In Phase I, your small business must establish the technical merit, feasibility, and commercial potential of your proposed research/research and development efforts. This is where the federal government determines if the small business awardee is still eligible to receive further funding support.

In Phase II, funding is received based on the results that are achieved in Phase I and the technical merit and commercial potential of the project. Funding for this phase usually does not go above $1,000,000 total costs for 2 years. Phase III is the final phase and this is where the small business awardee pursues commercialization objectives after the initiatives achieved in the first two phases. No Federal monies are awarded for the final phase.

Your business can only qualify for these programs if it is organized for profit, with a place of business located in the United States; has at least 51 percent owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in, the United States, or at least 51 percent owned and controlled by another for-profit business concern that is at least 51% owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in, the United States; and; has no more than 500 employees, including affiliates.

Funding Opportunities from your State

Business expansion opportunities are also available from your state since they usually earmark funds for this purpose. These grants are usually given to businesses that will also help stimulate the economy of the state. These are also awarded to businesses that advance causes that are generally beneficially for all. These include ventures that have to do with harnessing alternative energy; the environment; medicine; education; and science and technology.

To start your grant search to expand your business, you can go to your state’s Department of Commerce. Get right to the point when talking with the representative from your state government. Introduce yourself and your business, where you are located, the nature of your products and services, and the reason why you want to expand. Be courteous and thankful even if there are currently no opportunities for funding. They might even be able to point you out to other sources of funds where you can apply to.

If you cannot really find grants to make your business grow, you can always consider other options, such as obtaining a loan or continuing to work full time while working to make your venture grow. Don’t look for business expansion opportunities from only the federal and state governments. You can also try sourcing out grants from private institutions and grantmakers.

As we have said above, finding grants to start or expand your business is a tough job. Still, this does not mean that there won’t be any grants for you in the future. Just keep your eyes open to new opportunities by signing up for an organization’s mailing list—if that is provided or constantly monitoring new business funding opportunities in the Internet. Use your connections to find out if there are grantmakers who are currently accepting applications from entrepreneurs who wish to start or expand their businesses.

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Grants for Business Startups and Expansion

Are there Grants to Help you Start or Expand your Business?

If finding grants for individuals is a challenging task than trying to find grants to start or expand your business is like trying to find a needle in a haystack. Generally, the federal government does not offer grants to help you start your own for-profit business or make it grow. Uncle Sam does not also give grants to help you cover your business operating expenses or pay off debts incurred by your enterprise. It used to do so back in the seventies and eighties, allocating money for CDCs or Community Development Corporations. However, this is not an available option now.

But this does not necessarily mean that you can’t find grants for your enterprise venture. There are still rare treasure troves of available grants if you’re looking for funding for your own business. Be ready to do a lot of searching, however, as these grants are not going to be easy to find.

When it comes to grants for start ups and expanding your business, you can look up business plan competitions, private grants, and state grants.

Business Plan Competitions

Business plan competitions, as the name suggests, are contests started by universities and other funders for the best business plan. Whoever can write the best business plan will receive grant money to be able to start their business. Yes, it’s a tough way to get a grant (but then again, getting any form of funding is not easy). If you’re joining a business grant contest offered by an educational institution, you are going to be competing against equally-brilliant postgraduate students. If it’s sponsored by an organization that accepts entries from all parts of the globe then you are up against the best international minds.

But the good thing about joining a business plan competition is that you learn a lot from it even if you don’t actually get to win. Some of the contests are designed so that feedback is given to all participants in whatever stage of the process. This means that even if your business plan is rejected outright, you still receive valuable insight from experienced mentors who can help you improve your business plan, the foundation for any ultimately successful enterprise. Those who advance to the next level of competitions can get the chance to attend conferences, workshops, and mentoring programs—all non-monetary benefits that any neophyte entrepreneur can certainly benefit from.

Here are some examples of business plan competitions that we have sourced from the Internet just by typing the keywords “business plan competitions” on Google.

1.       MassChallenge (http://masschallenge.org)

MassChallenge is the world’s largest accelerator program and startup competition that seeks to connect resources and entrepreneurs. Any early-stage startup from anywhere in the world in whatever industry can apply to MassChallenge. Benefits include mentorship and training, free office space, access to funding, and media, among others. They highlight the fact that they don’t put restrictions and take no equity from the participants.

2.       Harvard Business School New Venture Competition (http://www.hbs.edu/entrepreneurship/new-venture-competition/overview.html)

Formerly known as the Business Plan Contest, this competition sponsored by Harvard Business School gives an opportunity for students to put their entrepreneurship principles in practice. The winner gets $50,000 in cash plus in-kind services while the runner-up receives $25,000 in cash and in-kind services. For the business track, all teams are eligible to enter for as long as they have at least one Harvard Business School student. For the social enterprise track, all teams entered are eligible as long as they have at least one person who is: a) an HBS MBA student, b) a Harvard University Reynolds Foundation Fellow, or c) a full-time Harvard graduate student currently enrolled in the Social Entrepreneurship Collaboratory or the Entrepreneurship in the Social Sector course at KSG.

3.       Wharton Business Plan Competition (http://bpc.wharton.upenn.edu/competition.html)

In this 7-month platform, entrepreneurs and their teams fight for the Venture Finals which award three top prizes. The group with the best business plan walks away with The Perlman Prize which carries $30,000 cash prize and $15,000 of in-kind services. The contest is divided into two phases: Phase 1 is an advisory phase and is optional while Phase 2 is the competitive phase—you must enter Phase 2 if you want to compete for prizes.

There are still other business plan competitions offered by other institutions. Check them out weekly so you are updated on the newest contests and can prepare accordingly. Two other sources for listings of contests for budding entrepreneurs are Biz Plan Competitions (http://www.bizplancompetitions.com/) and changemakers (http://www.changemakers.com/).

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Shady Home Equity Loan Practices to Watch Out For

There are various practices that some unscrupulous lenders could pull on you when you take out a home equity loan or a HELOC. If you’re not careful, you might end up paying more or worse, losing your home. Those who fall prey to these practices are usually the elderly who might not like to read the fine print and those who have credit problems and need money badly. You should always be wary of these shady practices as these violate federal laws on credit, debt collection, and discrimination based on age, gender, marital status, race, and national origin. If you see or smell something similar to the ones below, run!

One of the most common practices is the bait and switch. The lender gives you a set of loan terms that seems very reasonable when you’re still shopping for a loan. But when the time comes to sign the contract, you are given another contract that stipulates higher charges. Don’t make the mistake of confusing and just signing the contract. Be firm that you want to sign on what you had earlier agreed on.

Be sure to read the contract very carefully and note if there are additional charges for credit insurance and other insurance products to your loan. This is called insurance packing, where the lender puts in additional insurance that you don’t need into your home equity loan which can increase the amount you have to pay. Together with these unnecessary products, you might also want to check out for other fees that are not legal that are inserted into your loan. These are mortgage servicing abuses where you ultimately lose out.

We’ve discussed this briefly above but always be wary when you’re offered nontraditional loan products such as allowing you to pay the minimum payments that do not even cover the principal and interest due for a certain honeymoon period. Then when the time is up, you are faced with a balloon payment that you can’t anymore afford. Remember, failure to pay your home equity loan also means losing your home so you should not be slack when reviewing your repayment terms.

Finally, never sign blank papers or documents no matter who gives it to you. There have been cases where a contractor offers to improve a certain part of a home at a very affordable price. He says he can also arrange financing thru a lender if the homeowner can’t afford it. Sometime during the remodeling, the contractor hands a bunch of papers for the homeowners to sign, often threatening them that the work will not be finished without it. The end result is that the homeowners signed blank documents or documents which they were unable to read properly and to their dismay only later realized that they were being saddled with a very hefty home equity loan with outrageous terms.

A home equity loan or HELOC can help you get through rough times. But before you get it, you should strive to get the best deal and avoid scams that can make you lose your home.

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Home Equity Line of Credit (HELOC)

A home equity line of credit or HELOC is likened to a credit card—and some lenders actually give borrowers one. It’s a revolving credit line that allows you to borrow as much as you need whenever you need it by writing a check or using the credit card linked to your loan. Just like a credit card, you are given a maximum credit limit (the amount of your loan) so you only pay the amount you actually used. Thus, if you have a credit line of $100,000 but you only used up $20,000 you only need to pay the $20,000 together with the interest.

Just like a home equity line of credit, your loan is secured by your home. If you don’t pay it off, you may be forced to sell your house to pay off what you owe. Again, this requires advance planning and a rock solid repayment plan from your end.

While you can borrow up to 85 percent of the appraised value of your home as in a home equity loan minus the amount of your first mortgage, a HELOC is different because you need to consider many things before you sign the contract.

Ask the lender if there will be minimum and maximum withdrawal limits for your HELOC and if there is a so-called draw period. The latter refers to the time when you can get money from your account. When the draw period is up, you won’t be able to borrow any more money from your credit line unless you can renew your loan. Now here’s the catch: When the property values dropped significantly in 2008, banks no longer renewed the HELOC of borrowers, leaving those who were looking to refinance as a way to pay for their loan with a very heavy debt burden. This is one risk that HELOC borrowers have to take.

Before taking out a HELOC, be sure that you get a clear idea of what your interest will be and how it is structured. There are different interest rates for these plans and you need to certain that you know when it will go up and whether you can afford to pay for it when it does. Many HELOCs have variable interest rates wherein you get to pay a very small amount in the first few months—even at a steeply discounted rate—and then goes up to the real market value for the rest of the repayment period. Be sure to on the periodic and lifetime caps of the loan so you can determine if you will still be able to pay it off in case the rate surges. There are also other lenders that are amenable to allowing you to pay very small monthly payments over the life of your loan and then make a balloon payment to pay off the balance afterwards. This kind of arrangement is risky and you’d want to avoid it as much as possible.

Now if you can find a HELOC with a fixed interest rate and has reasonable terms overall then by all means go for it even if the monthly payments are higher. The plus is that you are assured that you will be paying the same amount over the life if your loan.

As in a home equity loan, be sure to negotiate the closing costs and other fees. With HELOCs, you might also have to pay continuing costs such as an annual membership fee and a transaction fee. Be sure to read the contract carefully before affixing your signature so that you are clear on the terms. You are still covered under the three-day cancellation rule if you do decide to rescind the contract for whatever reason.

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Making Wise Decisions on Home Equity Loans

Home Equity Loans and Home Equity Lines of Credit

One of the good things about owning a home or at least paying the mortgage on it is that you build equity which you can borrow from when the need arises. These tools for credit come in two types—home equity loans and home equity lines of credit. Both allow you to fund certain projects like home repairs or improvements or even pay for your child’s college tuition. In exchange, they also put your home on the line so if you can’t pay, you risk losing that roof over your head.

There are fundamental differences between the two kinds of loans and choosing which kind best fits your situation is part of the smart shopper’s guide to getting this kind of loan. This report will give you the lowdown when you borrow against your home’s equity so you can make the most out of it and not have face the scary prospect of foreclosure in your future.

Home Equity Loan

A home equity loan, also called a second mortgage, is secured by your home. You can borrow up to 85 percent of the equity you have put up in your home and receive a fixed amount when your loan is approved. How much the lender is willing to grant you will also depends on other factors. They will take into account your income, credit history, and the market value of your home. Thus, it’s important that you get a copy of your credit report and your credit score at least six months before you plan on obtaining your loan. This way, you will be able to review it and check for errors and enhance your credit rating. The better your credit score, the more competitive interest rates you are most likely to get.

Just like your mortgage, you repay the home equity loan in equal monthly installments at a set interest. If you don’t meet the monthly payments, the lender could foreclose on your home. This is why it’s important that you already have a solid and doable repayment plan in place before you even start looking for a lender.

Whether you need this loan to pay for tuition or a major surgery, consolidate debt, or do home repairs or remodeling, you need to shop for the best deal around. Banks are just one source of home equity loans. You can also get quotes from mortgage companies and credit unions. If you know a trusted mortgage broker, you can ask him for recommendations as well. Do not hesitate to inform lenders that you are looking for the best rates and the most reasonable deal around. This way, you get to haggle and be able to get the best terms.

When negotiating a home equity loan, take note of the interest rates and other fees that might be added to your account. Remember, if you add to your loan amount loan processing fees, origination fees, lending fees, appraisal fees, broker fees, and others to your loan amount, you’ll surely end paying more for them over the life of your loan. So negotiate these as much as possible.

Finally, don’t forget to look over your contract carefully. Read it and if there are terms you don’t particularly like or was not reflected when you talked it over with the lender, point it out and renegotiate. If the lender won’t agree to your changes, don’t sign anything. There are always other lenders around who would be willing to come to terms with you. Finally, if you do get to sign the papers and decide that you want to cancel, you also have the right to do that under the three-day cancellation rule. This states that you can cancel the deal for any reason without incurring any penalty within three days from signing the loan contract.

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Smart Car Loan Shopping

The Smart Shopper’s Guide to Getting an Auto Loan

The following ways will help you get the best deals on your car loan so be sure to keep them in mind before and during your trip to the dealership.

• Choose your car based on how much you can afford for an auto loan.

Before you even go to the dealership, you have to have an idea of the car you want and how much you are willing to pay for it. This is more complicated than you might initially think. After all, how difficult could choosing a car be? But the price, make, and model are just the tip of the iceberg. You have to compute if the price range is within your capacity to pay so that means taking a close look at your savings and your budget and whether a car loan has a place there. If the car you like is not affordable, it might be necessary to find another kind or you might be willing to cut expenses somewhere else so that you can get the vehicle of your dreams.

Doing this is easier now, what with the Internet allowing you to visit websites that give you price ranges of various cars by brand and other criteria. Be savvy and do online searches so that you have a general idea of the type of car to buy that will be within your spending plan.

• Be sure to shop in different places for an auto loan.

There are many sources of car financing so don’t immediately assume that the car dealership is the only place to get your loan. In fact, you can get more competitive rates in banks or credit unions (if you are a member) than at a dealership so be sure to include them when you go comparison shopping. Use the Internet to your advantage so you save time and energy when getting quotes. Be sure to compare apples to apples so that you know where the best deals can be found.

Other sources of financing include online financial institutions, getting a home equity loan, or borrowing from a rich friend or relative. However, you do have to watch out for some pitfalls. Some online lenders can scam you so you need to check that you’re dealing with a legitimate business. Getting a home equity loan to buy your car is very risky and not recommended because you are essentially guaranteeing your home for your car which means that you lose your home if you don’t make your car payments. Borrowing from rich friends and relatives can be ruin relationships if you don’t keep your promise to pay.

• Get preapproved for a loan first before going to a dealership.

Just like getting a home mortgage, preapproval is the process whereby your financial information is reviewed and the lender gives you the range of loan that you can afford based on your debts, income, and other factors. Choosing a car becomes easier when you know how much you can actually spend. It also takes a lot of the stress out when you are already car shopping. Be sure to ask for a very competitive rate when you are getting pre approval from the lender. Some lenders literally give preapproved creditors blank checks so they can fill it out themselves and give to the dealer when they have decided on a car to buy.

• Don’t discuss financing with the dealer before you’ve settled on the exact price.

Dealers are shrewd businessmen. Some of the more unscrupulous ones will give you a very tempting financing offer—a low-interest loan. But if you agree to it before you even know the price of the car you want to purchase, the dealer could simply jack up the price of the car so he still makes a substantial profit. You can haggle with the dealer by researching the prices of the cars you intend to get in consumer sites like Kelley Blue Book (www.kbb.com). Normally, the sticker price of the car is 5 to 10 percent of what he paid for it so if you do your research beforehand, you will know what this price is and can bargain more readily. As much as possible pay no more than 5 percent above the price the dealer got the car for.

• Don’t reveal how much you can afford to pay per month until you can settle on the price.

In the same way that you don’t discuss financing until and unless you have already agreed on the price of a car, you should not reveal how much you are willing to pay each month for a car. They can do all sorts of mathematical calculations to match the monthly payment you are willing to fork out. For example, they can increase the interest rate or even the car price just so that they can match what you are willing to pay for each month. The figures may not even reflect the actual value of the car. So if you are pressed on how much you can pay each month, firmly but politely say that you want to see the cars first and get the final price first before discussing loans and terms.

• Give a substantial down payment—20 percent or more—to your car purchase.

Yes, it is tempting to go with low down payment auto loans. But you’ll certainly bleed with the interest while you are paying it off. As much as possible, save at least 20 percent for the downpayment so that the monthly payments are manageable and the interest rates competitive. If you don’t have this kind of money for the downpayment, you can always downgrade to a less expensive model or get a used car instead.

• Opt for short-term loans.

A car immediately loses value the moment you drive it away from the dealership. This is a fact. So why should you go for long-term car loans of five years or even more? Some defend longer term financing because it makes the monthly payments lower. The problem is, you are also paying a lot more in interest overall. In some cases, by the time you sell your car, you already have excessively paid a lot more for it. So don’t be tempted for long-term financing. Strive to pay off your car loan in four years or even less so you can free up your money earlier and use it for something more productive.

Here’s one more thing: You don’t have to change cars every now and then. A lot of Americans seem to be of the mindset that a car loan is a normal and perpetual part of the budget. You are not obligated to sell your car and get a new one every five years. For as long as you maintain it and take good care of your wheels, it should serve you faithfully for a long time.

Finally, if you originally opted for a longer loan term but later decide that paying it off earlier is better, be sure to read your contract again. You want to be certain that you’re not going to be paying penalties for paying off your loan early.

• Beware of the add-ons.

Car dealers make a lot of money by putting addons into your car purchase so that you end up paying more. The FDIC Car Loan Shopping Guide states:” Service contracts, credit insurance, extended warranties, and other options are not required and can be costly over the term of the loan.” So be sure to read your contract before signing and don’t let the dealer coerce you into getting these things which are not really necessary. You’ll surely save a bundle.

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