Car Financing
It is an unspoken truth that is at the heart of any negotiation for the purchase of car that how you finance the purchase can have a big impact on the price you get and how well the negotiations go. The process of going to a car lot and working with a car salesman to buy a car can be a trying one. It is hard to get the salesman to talk straight to you. Somehow, despite being almost nauseatingly sweet and cordial, car salesmen creep a lot of people out and they always make you feel like they are doing you a favor to sell you a car.
It is preferable to buy a car from an individual simply because you won't be working with a professional salesman who knows how to push your buttons and manipulate the sale. But there is the issue of financing that can push you to a dealership or car lot. Very often on the seemingly nonstop television commercials, car dealerships and lots advertise almost unbelievable loan rates. These advertisements can draw you in which, of course, is what they are intended to do. But it is smart to be skeptical about what kind of financing a car lot will provide. If what the television commercial says seems too good to be true, it probably is.
When you sit down to negotiate the price of the car you want, you do have some leverage. A big factor that can bring down your car payment tremendously is a down payment. A trade in is good but unless you did your research up front, you don't know if they are giving you a good value for your trade in. So by coming in ready to put down 10% or more on the purchase of that car, that sweetens the pot for the car dealership and they will bring that price down to capture your business.
As a rule, going with the financing options the dealership has to offer is probably not going to result in the best financing deal you can get. Car dealerships are not financial institutions. They should stick with what they know which is selling cars. That means that if you let the dealership finance the car, there will be some hidden surprises in that loan to offset the "great deal" that they advertise on TV.
By sticking with credit resources that you already know and understand, you have a better chance of getting a straight forward loan with no hidden surprises. If you have a good relationship with your bank, with a little bit of paperwork, you can get a good car loan with a reasonable payment and build your credit with the bank along the way. Credit unions often offer even better terms because they are in the business of financing loans and managing your money. So be cautious when you go to buy a car and be ready to take control of the negotiations. If you bring your own money and your own credit to the table, that is a big step toward making you the boss when it is time to make a deal to buy that beautiful new car you want.
