In recent years, competing car manufacturers have started offering
incentives for car buyers unprecedented in the auto industry.
These include loans with very low or even 0 interest rates, factory
rebates on many new models and cash back.
But, take a closer look at some of the facts regarding these
Car dealership financing.
It is always better to have an approved auto loan from
a bank, before making a trip to a car dealer. In this
way, you can see the price of the vehicle and the cost of financing
it as two different things. When the dealership finances your
new car, the two figures are not clearly distinguished. A sales
person will work hard to confuse you as much as possible, and
the phrase “low monthly payments” will be stated over
and over when you ask for loan details, or a price break down.
Most likely, the dealer will make an average of $300 on your loan,
which will be sold the next day to a real lender anyway.
Low and 0 percent interest rates.
These are limited to certain models and come with many conditions.
In general, they are reserved for people with a very high
credit score. In order to qualify for a low rate, you have
to accept the dealer’s price of a car.
There are times when a dealer’s low interest rate
financing is truly the best deal. To make sure you are
getting it, make it clear to a salesperson that you are not interested
in financing the loan through them. Negotiate the car’s
price and see what you would pay throughout the whole life of
a loan on which you were already approved (or could get somewhere
else). Then compare that figure with the total you would pay on
a dealer's special financing loan.
Factory rebates and cash back.
Essentially, both are the same thing and are offered by car
manufacturers. They can greatly lower the price of a new vehicle.
Cash back, which can be as high as $5000, is automatically applied
to your down payment, and sometimes a portion of it is used to
buy extra options. In order to get the best deal possible, get
approved for an auto loan first, negotiate a car price with
at least two dealerships in your area and take advantage of factory
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Tips for dealing with car dealers:
Car salesmen are trained to use high pressure tactics to confuse
you as much as possible in order to disguise the potential profit
they will make from you. Here are some general tips to help you
get a better deal.
- It is believed that shopping on rainy days, or at the end
of the month or the year, might get you a better deal.
- Visit at least two different dealerships to see how low they
are willing to go on their prices.
- Use online resources to get a general idea of the price of a
model of car that you are interested in.
- Find out what the Manufacturer's Suggested Retail Price is from
the Kelly Blue Book.
See also: buying
a used car, auto
loan online, lowering
car insurance, online