ALT-1 Why you should Secure your Financing before Car Shopping
When walking into a dealership, you want to get a car you want and you want to walk away with a good deal. But how do you know how much you can spend? We all usually crunch the numbers at home before we go and figure out what we can afford.
Going to the bank first will cut out a lot of hassle. You'll know what you are approved for and what your payments are going to be before you even pick a vehicle. But as with anything, make sure that you have found the right financing for you. Credit Unions are usually better with their interest rates, but still explore you options.
Most dealerships make most of their money off of the financing that they provide. What usually happens is the dealer is paid a very large percentage of the financed amount up front, and every month or quarter thereafter, the finance company sends them a check for part of the interest that was made off of that loan. Once the loan is paid off, they receive the rest of the financed amount from the bank. This also holds true when the dealer send the finance company multiple deals. The more they send, the more they get. The finance company will send a bonus check for the number of loans that have been placed through them, making the incentive for them very large.
If you already have the financing in hand, you don't have to worry about being taken advantage of because they want to make their pocket grow. Now everything else comes down to price.
Negotiate as you normally would. Make sure that you under estimate the salesman. He will try to make you believe that this one vehicle is better than any of the other vehicles of the same model in the newspaper, which is why the price is greater. Make sure that you have done you research to ensure that you are getting the best deal.
The dealer will always have it in his mind that he is still going to make a lot of money off of you because you are going to use his finance company, so he is more likely to give you a better deal. Don't spill the beans about already having financing; it will make him not want to budge at all.
Don't jump at the first car that seems like it is a good deal, visit many places and explore your options. Don't ever be afraid to sleep on anything, tomorrow you might have a clearer head.
