Numerous individuals walk into a car dealership to buy a new car, yet don’t have financing in place. They simply accept whatever the dealership offers them. Doing so tends to be a mistake, as the driver may find that they could have gotten a much better deal by making financing their primary consideration. Consumer Portfolio Services offers advice for individuals who are thinking about buying a new car.
Dealers Sell Car Loans
What many people don’t realize is a car loan is simply another product the dealership is looking to sell. In fact, they may be more concerned about selling the financing than selling the car. They will use a number of techniques to make a buyer think he or she is getting a good deal. When the salesman presents the loan offer, a finance reserve is added to the interest rate. This typically runs between one and three percent, and is added to the amount the financing company charges for the loan. For this reason, car dealers want customers to take advantage of their financing, but a buyer can often get a better deal elsewhere.
Furthermore, car dealers often promote additional items, such as extended warranties. They aren’t doing so out of the goodness of their heart. They make money off of these products and, if the buyer finances the additional item along with the purchase price of the car, they make even more. If a warranty or other items are desired, research them independently before going to buy a car. This makes it easier to determine how much will be paid in interest on these items and whether they are truly worth the added expense.
The more a person knows about vehicle financing prior to making a purchase, the easier it is to get a good deal. Imagine being able to upgrade to a higher trim level without spending more. With the right financing in place, this may be possible. Obtain multiple offers for car financing before heading to a dealership. Don’t hesitate to listen to the dealer’s finance offer, however. There are occasions where it may be the best deal. The only way to know is to ask.