You have heard the saying: “It is always darkest just before dawn.” That applies to many aspects of the United States economy. While the country is still struggling to pull out of the recent economic fiasco, there are current opportunities for people to enhance the quality of their lives by purchasing homes, automobiles, and other items with record low interest rates. Making the most of opportunities and deals requires you do some research and remain in control throughout your shopping and buying experience.
Know your options
Practically all car purchases that are financed use one of two methods: Direct lending or dealership financing.
On the spot financing
Financing from the car dealer is frequently used because of enticing advertisements that are worded in such a way as to make people believe the car dealer is able to offer special financing that is not available elsewhere. Ads will tell people that “nobody gets turned down,” and “good credit, bad credit, no credit. All are approved.” It is also very convenient to arrange for financing at the same location where you buy your vehicle. Loan officers are available on weekends and evenings. They can be taking care of paperwork while you browse and test drive cars. Dealerships work with a wide variety of lenders and know which lender specializes in making loans to people with bad or slow credit.
The Federal Trade Commission (https://www.consumer.ftc.gov/articles/0056-understanding-vehicle-financing#fin) urges you to shop around before choosing any financing offered to you. While the dealership may enter into a contract with you about financing your purchase, they almost always sell the note to a bank, finance company, or other assignee. The car dealer is looking to make money at every opportunity. By adding them as a middleman to your financing equation, you may be adding finance charges that would not be there if you went directly to the source of the loan.
Direct lenders
Working with a direct lender for your automobile loan is not much different than working with a loan officer at the dealership. You are still qualified based on credit history, income, and current debts. By knowing your credit terms and payments in advance, you are less at the mercy of the car salesperson and dealership staff. You know what car you can afford and do not have to worry about them telling you that “special financing” is not available on the car you really want. Companies that buy used cars also simplify negotiations by eliminating any trade-in confusion or haggling.
The more research and leg work you do prior to going to the car lot, the less dependent you are on the dealership and the salesperson. You can arrive knowing exactly how much you are willing to pay for the vehicle of your choice. You are able to establish very quickly that you are a serious buyer and not just someone browsing. You are able to keep the conversation and focus on one thing – the price of the vehicle you want. If they are not able or willing to meet your terms, you can walk away with a minimal investment of time in the process. You are the one in control of the negotiation.
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