The best time to shop for auto financing is before you go to the dealership. While many people worry about getting a raw deal on a car, the real damage can come from the financing. Dealers make their money off in-house financing because they mark up the rate you’re offered.
For example, if you qualify for a loan of 6 percent through a bank, the dealership may offer you 8 percent in financing. And for many car buyers, as long as the payments make sense, they don’t worry about the details. Plus, getting financing through the dealer is often fast and convenient, especially if you haven’t had a chance to shop.
But since you are reading this article, you’re likely considering the perks to obtaining financing before heading to the dealer. Below we’ll cover the benefits of doing so in more detail, as there’s more to this than just saving money.
Favorable Terms
Before you walk into a dealer, it’s best to have an idea of what the interest rates and loan terms are based on your credit score, as well as the monthly payments you can afford. This way, if the dealership does offer you financing, you’ll know how it stacks up to what you can get on your own.
Lower Stress Levels
Another benefit in obtaining financing before buying a car is that you’ll have lower stress levels when it comes time to sign the paperwork. You’ll feel confident that you’re getting a fair deal, and you’ll be better prepared to negotiate, if you have to. Car salespeople have a history of pressuring people, but being informed prevents this.
Save Money
By shopping for financing in advance, you can secure the best loan terms and interest rates based on your credit score. You can apply online to see how much you can borrow and what your payments will look like. It’s also possible to identify potential credit problems ahead of time. For example, if your score is lower than you thought, you can find out what’s causing the problem.
Get Better Rates
Dealer financing is most convenient, so if you’re already pre-approved for financing, you can use this to get the best rates from the dealer. Believe it or not, dealers have some of the lowest financing rates available. When you come in with a pre-approved loan offer, the dealer must compete with this. If the dealer does beat the rates, make sure that the loan terms don’t change.
When you shop with RepoFinder, you have access to repossessed cars, trucks and SUVs at great prices! Because these vehicles are being sold by banks and credit unions, you are also in a great position to negotiate the best rates possible. Start your search for a repo car with RepoFinder!