Finding the Right lender
When it comes to borrowing money for your car, the question is, how much will it cost and who will give you the best deal? The difference between two different loans can be substantial. It’s worth your while to shop around for the best deal.
The Bank as a Lender
If you have a savings account and checking account with your bank and your credit rating is good, your bank will want to make you an offer for a car loan. But what is their offer, exactly? The good thing about getting a loan from your bank is that you actually know what you are paying out. Banks are heavily regulated and are required to give you full disclosure.
A good thing to know is that there is wiggle room with many banks. So, if you are a valued customer, you can ask for their best rate. Print out their offer and take it with you to your dealer.
When interest rates are high, most banks may be less able to offer you a great deal on a car loan, but when interest rates are low, their offer may be competitive, and you won’t be paying hidden charges.
If you have an account at a credit union, you may find that your best offer is with this financial resource. So do not overlook it as a possibility.
The Dealer as Lender
Large car companies like Ford and Chrysler have their own financing institutions. The dealer makes an additional profit on the sale of the car by financing it for you. So, if he thinks he will be financing your car, he may be willing to make you a better offer on the price of the car. For that reason, you want to keep your options open during the negotiating of the price. If he asks you up front if you will be financing the car through his company, you can say that you are open to the best offer he can make you. Then, if he offers you a higher interest rate than the bank, you can tell him that you have a better offer and see if he can do better for you.
Hidden charges
One of the problems with taking out a loan with your dealer is the fact that a number of dealers hide charges in their deal and sometimes offer one rate while actually charging another, higher rate. That is why it is important to have a print out from your bank with their offer so that you can compare both offers.
When the dealer needs to deal
One of the best times to get a real deal from your dealer is at the end of the season when his inventory is high. He may not be able to beat the interest rate of the bank, but he may lower the cost of the car so substantially to get it off his lot that his total deal is much better than the bank’s. The other best time to take the dealer loan is when the market is flooded with new cars and dealerships are offering extremely low interest rates in order to move product. At this point, the dealer does not care how much he makes on the loan. He simply must make sales. Of course, he may then be making his money on the price of the car, so he comes out even in the deal The important thing is that you have already got a loan offer in your pocket from you bank, just in case.
