What You Need to Know About Financing

The majority of new car purchases are financed. Before heading to the auto dealer and signing the contract there are a few things you should know. Even though you can obtain financing from the auto dealer, you may have other options which offer better financing.

Car buying tips:

First off, remember that car salespeople are there to do exactly that – sell cars. Chances are if the car is there today, it will be there tomorrow. And, purchasing an auto is a big purchase.

Remember that you can negotiate, as the sticker price is typically not the actual price of the car. It is common for the dealerships to mark up the sticker price on the vehicle before placing it on the lot. If the auto dealer wants to sell the vehicle he typically expects to have to negotiate. Do not be over enthused about the vehicle. This will give you the disadvantage. Try to maintain a calm demeanor as not to give the salesperson any sort of read.

Zero down, zero interest and zero payments for “x” amount of time. Be very weary of so called deals like this. While they are attractive in the long run the buyer pays an above-average interest rate and larger payment. You may be off the hook from making payments for “x” amount of time, but when the payments do begin, the car dealership is making up for not lost interest and profiting once again.

Even though a car dealer will have on-site car financing, this doesn’t necessarily make it your best option. If you have above-average credit, then likely you will qualify for their wonderful financing. However, most people will not. It is recommended you speak with your bank or financial adviser to see what financing they offer and if it is more beneficial than that offered by the dealer.

It can be quite tiring purchasing a new car as you often have to work with many sales staff. First you have your salesperson. Then they include their manager at the table. Then the manager brings the finance department in. By this time, you are likely exhausted. And, this is the time to be especially aware of hidden extras that have been calculated onto the final bill. It is typical that extras like tinted windows and rust protection are added to the vehicle cost. Make sure to mark off any of these “hidden” extras.

There are many car buying tips to be aware of. One of the most important however, is not to act irrationally and to check with your bank previous to shopping for the vehicles.