Credit: abcnews.go.comThe test drive is done, and you like the car, it’s now time to buy it. But before you even start the payment process, the dealer readily offers you financing. It makes buying the car easy, so you think. You need to understand that car dealers have to make sales so as to stay afloat thus you must know a few things before you sign the finance form. If you have bought a car before, you know what to expect, and you are probably prepared before you walk into the dealer’s showroom. Either way, here is what you should know about car financing.
What You Should Know about Dealer Car Financing
Be Acquainted With the Invoice… Once you have settled on a particular car, the first thing to do is to scrutinize through the invoice for its price. The invoice will most of the time indicate the amount the dealer pays the manufacturer. It also contains the manufacturer’s recommended price. That way you will know how much the dealer is making and by extension determine whether the deal is worth it or not. If you are armed with this information before you walk into a dealership, you will be at a better position to make better negotiations.
Know the Rebates the Manufacturer is Offering… You may not it, but new car financing sometimes involves double rebates. Mostly such information is not in the public domain. You might be affiliated to certain organizations, or get coupons that enable you to qualify for additional rebate.
It is important that you know about all the rebates you are entitled to because that is the only way you will be in a position to claim for them. It is a known fact that some dealers will avoid giving clients all the rebates there are entitled to and instead use them to make more profits.
Get Enough Information about the Dealer You are Transacting With… Forget the fact that you will pay the money back, car financing is serious business, and you might end up losing money if you are not careful. It is for this reason that you need to conduct good research on the dealer before you transact with them.
Visit their websites and check reviews from previous clients. The paperwork involved when applying for new car loans can be quite tedious, so you need to work with a dealer who is co-operative. Do all you could to gather as much information about the dealership even it means contacting previous clients and inquire if they were happy transacting with them.
Go Through Your Credit Worthiness… Most customers require car financing. Before you head to the dealership, make sure you check your credit history because the cost of the loan will depend on your credit worthiness. If you know you credit history, you stand a better chance of getting a loan even if you are looking for used car financing.
You can always get a free copy of your credit report from your nearest credit bureau. Be sure to go through the report to ensure it is accurate. If you have an outstanding loan clear it because a flawless because that is the primary factor nearly all financial institutions use to determine your creditworthiness.
Get Your Financing Whenever Possible… You need to realize car financing is one of the most profitable avenues for dealerships. The same dealers get the money to loan you from the banks but a subsidized rate. They then charge you a higher rate from the one charged by the bank to make profits. The fact that you are being financed by the dealer does not prevent you from walking into a bank and getting your quotation.
The quotation must be based on the value of the car you intended to buy. With a quotation on your hand, approach the salesman and ask him to beat that. Since most don’t want to lose business, the only option is to offer new car loan rates that are lower than those of the bank. Be on the lookout for promotional offers from manufacturers although promotional rates are hard to beat most of the time.
Avoid Buying the Car on Your First Visit… The first visit should be all about checking out the car and conducting a test drive. You may also ask questions about the car you intend to buy. Don’t give into the salesman persuasion but instead gather all the information you need. In doing so, you will give clear signs to the dealer that you are willing to take your time and make an informed decision. Take your time, analyze everything and decide on whether you want to buy a new or used car. This will be based on the rates given by the dealer.
Shop Around… Just like anything else, car financing rates vary from one dealer to the other. Some will be high, and others will be low. Before you settle on any particular dealer, make sure you visit several of them. Ask for quotations every time you visit a different dealer. Once you are satisfied, sit down and compare all the quotes given to you. It goes without saying that you will settle for the cheapest quote but even then don’t fail to negotiate for an even lower rate.
Buy at the Right Time… There are certain times of the month when dealers will have special offers. During end month or end of the year is when these deals popup. If you buy at these times, you not only end up getting cheaper rates but you can buy a model that would have been out of reach during the other months. The weekends are also a good time to buy because dealers are busy at this time. When the salesmen are busy, the chances of giving you a better deal are always high.
Getting a good deal depends on your ability to negotiate and making comparisons. Don’t be in a rush to buy a car as you might end up with a bad deal and probably a bad car. You may buy or lease a car depending on the urgency. Rent a car to move you around as you wait to strike a good car financing deal. Sometimes the wait is worthwhile.