Loan officers come in all shapes and sizes. They generally tend to specialize in either mortgage loans, commercial loans, or consumer loans. For the purpose of this article, I’m only going to be addressing mortgage loan officers. These men and women can be your best friend or your worst enemy. They want you to get your loan. They also want you to get the home of your dreams. So in the beginning of the home buying process when they are giving out money they really do seem to be the best friend you can have on the planet. However, that relationship can go seriously wrong if you and your loan officer do not temper your wants with your needs and fit them into your budget in a manner that allows for contingency planning.

In plain English, what I just said is this. If you have a loan officer that is giving you more money for a house than you can really afford to pay back, they really aren’t being the friend you thought they were. We all get stars in our eyes a bit when we’re shopping around for the perfect home and I can think of very few people who have ever looked at a really nice house and said you know that’s just too nice for us, we don’t deserve all that. I know I’ve never said it. We all want the best house for our money. We want our kids to go to the best schools and we want the really nice huge backyard for our kids and their friends to play in. The reality is that often what we want and what we can realistically pay for are two entirely different things.

Unfortunately a loan officer can suggest things like interest only mortgages or adjustable rate mortgages or countless other things that will ultimately lead us down the path of financial ruin. I’m saying all of this not because all loan officers are bad or even that most are, but to warn you to make sure you are aware of what you are getting into when you get your loan. Chose your loan officer wisely, ask questions, get references, and make sure you read the fine print.

Now, I’ll get to the best friend part. If you have a loan officer who shoots straight and tells it like it is, you’ve found a golden friend and you should work hard to maintain that contact for the next major purchase you decide to make in your life. You see, if you find a loan officer such as the one I’ve mentioned above, you have found someone that can act as an advisor for your financial situation. Someone who can help you make the decision on whether you are adequately prepared to buy up or if you should stay where you are a little longer. He/She will also be the one to tell you that while you may be approved for XYZ dollars, it may not be wise to put it all into your home.

These days when you step into a car showroom, there will be two major things that the dealer will be offering you. First he will be offering you cars, and secondly he will be offering you finance packages. This is how you should look at it. The fact of the matter is you may probably wouldn’t buy a car from your bank, even if they started offering them, so you may wish to apply the same scrutiny to the finance packages available at the car dealership and choose to buy only you car there and the finance package elsewhere.

It may be that there is nothing wrong with the finance being offered at the car dealership and in many cases this will be true. However, you must be aware that just because you buy your car there, does not in any way imply that you have to use the finance options and terms that they are offering. You are always free to take a loan from somewhere else, such as a bank, and pay for the car outright, and then simply make the loan repayments to the bank as with any other loan.

You should be careful to find out exactly how much you are being charged for car finance. The primary way to calculate the charge of any credit is by using the APR or annual percentage rate. This calculates the cost of the loan using a standardised formula and all lenders must use the same method of calculation. However, just because a car dealer’s APR looks attractive does not mean your search is over. You should also, always find out how much the car would cost if you paid in cash. Remember that providing a cash discount is exactly the same as charging extra for credit. If the cash price is lower, then you may be better off getting the loan from elsewhere and paying for the car with cash, this will take advantage of the better price and you will have a smaller amount to pay back to your lender.

The other thing you should look out for is down payments and closing payments. These are payments that are paid at the beginning or end of the term of the loan, and while the monthly payment terms may be attractive, it could well be the case that there are large additional payments to make and you should not forget to calculate these in when pricing the finance.

Car finance can be almost as important as the deal you get on the car itself and you should always regard getting a good deal on the financing as part of the process of getting a new car.