Buying a new car is such an exciting rite of passage and with it comes a whole slew of decisions to be made. Do you want sporty, practical, red, blue or green, manual or automatic transmission, or hybrid, or just gas-sipping? Ultimately, the biggest question is, Should I finance my auto loan through my dealer or secure financing in advance? Depending on your circumstances, one could certainly be more cost effective than another.
Dealers sometimes offer amazing deals on car financing, thus making it better to finance your auto loan through a dealer. 0.0%, 2.9% and cash back specials for financing directly through the dealer are not uncommon. However, these kind of deals are reserved for those with amazing credit history and extremely high scores in the high 700 or 800 range. If you are fortunate enough to have these qualifications, then it would certainly be best to secure your financing through your dealer. Usually these dealer incentives are offered on cars on which there is too much inventory. These deals are also usually available in early fall, when the next year's models are due to come out, and the dealer has to make space.
However, say the vehicle you want isnt part of a special promotion incentive, or you need to buy your new car at a time that doesnt sync up with their promotions. Cars that are hot tickets (such as hybrids and other fuel efficient vehicles) dont usually come with such enticing offers. If you have great credit history, you will probably still be fine to secure dealer financing at reasonable rates.
But, if your past is not all that pretty, it would be wise to go to your local bank and investigate the car loan options available for you. Many times, dealers act as the third party for car loans and may not want to assume the risk of someone with bad credit, therefore charging significantly more for the interest rates. By going to the bank directly, you will eliminate the middleman and possibly get better auto loan rates than going through your dealer.
