Car Financing

Car financing still remains a mystery to most consumers. The financing needed to complete your new or used car purchase is a critical step in the car buying process. Yet most consumers treat financing as secondary to negotiating the price of the car.

Certainly, negotiating the purchase is important, but a lot of money can be saved in the finance office of the dealership, if you've done your homework. Most consumers don't. They think that the negotiating is over and they're just going to sign the papers on their new car. Big mistake! If you aren't prepared for the finance transaction, you could fall prey to the highest income-producing department in the dealership.

Some dealerships advertise their cars at a loss. If you're not the victim of a bait and switch, where the car you saw advertised is not available, the dealership just wants to get you into the finance office where they are going to make the real money on the sale. (Yes, they're willing to lose money on the car just to get it back in the financing!)

There are several steps you can take to prepare yourself for this step in your car buying:

Check your credit. Your credit score is the largest factor in establishing your interest rate on the loan. Get a FREE Credit Report and CreditCheck trial from FreeCreditReport.com. Make informed decisions to build or maintain a solid credit rating. Order your FREE Credit Report today!
Know what kind of interest rate you'd qualify for at your own bank or credit union.
Be prepared to make a cash down payment. You will be asked for it. Sometimes, the lender will require it. And, any down payment you make will lower your monthly payments.
Make sure you know what you're signing. A lot of customers have walked out of the finance office not knowing that they have purchased every after-market product known to man, all of which increase your monthly payment and the balance you owe on the new car.

For the best explanation of what to expect (and what to watch out for!) in the finance office, check the chapter on "Financing your Purchase in "Car Buying Advice from Inside the Dealer". Here you'll find one of the best explanations available for the consumer about financing your new car.