Getting auto loan financing for a car you want prior to visiting the dealership is a strategy many prospective buyers are adopting in droves. By going to a financial institution in person or via the internet, consumers are finding that the process of purchasing a car is often times a lot easier.
But why is early financing easier? Here are a few reasons:
You Can Avoid Dealer Auto Loan Financing
If you’ve never tried purchasing a car through a dealership, then you may not be aware of the hassle that can accompany their auto loan financing process. Not that every dealership causes its customers problems, but sometimes dealers take advantage of a customer’s ignorance in relation to interest rates and additional fees.
For instance, you may not be aware of your credit score and how it affects interest rates – but dealers know. As a result, you may end up paying higher rates than you should, which can significantly increase your monthly payments. However, if you work with an outside financial institution that makes no gains from selling a vehicle, they will offer you a loan at an interest rate that’s fair, alleviating the stress of negotiating with the dealer.
You Can Secure Cheaper Interest Rates Online
Another huge benefit to working with an outside financial institution, particularly one that functions online, is that you can take advantage of lower interest rates. For instance, if you’re thinking about taking on auto loan financing through a bank, they will follow the current rate, which now sits at about 7% for new cars. However, some online entities offer loans at rates as low as 5.4%, which makes purchasing a car that much more affordable.
How Does it Work?
If you’re thinking of securing a loan before visiting a dealership, you can simply apply online or with a local institution. You may have to provide specific details about the car. If you are approved, you will likely receive a blank check to take to the dealership. After you’ve signed the paperwork, you’ll fill out the check with the price and dealership name. By signing the check, your loan becomes official and is based on the amount written on the check. Now, your responsibility will be to pay back the financial institution for the amount of the loan.
Many consumers feel that securing auto loan financing prior to visiting the dealership is not only smart, but necessary. So if purchasing a car is on your agenda, it’s a good idea to consider the pros and cons of taking this route versus working directly with the dealership’s finance company.