Automobile dealerships are in the business of selling cars. Some, particularly used car dealers, do not even offer in house financing, or financing at all, for that matter. Most require you to go to an independent lender, such as a bank or credit union, to secure financing. New car dealers often offer financing, but even when they do, you should check out alternative financing, because dealers may not offer you the best terms for your loan.
Dealerships that offer financing most usually require large down payments in order for you to qualify for financing. Most people know that if you were to pay cash for a vehicle, you can count on getting a better price for the vehicle. What many people don’t think about or realize is that when you secure financing in advance, you can actually deal with the seller as if you were a cash customer, and you get the same reduction in price that any cash buyer would get. Often the reduction in price is enough to allow you to make a lower down payment or even no down payment at all.
Many dealerships, new car dealerships in particular, do not extend credit to people who have no credit history, low credit history, or bad credit history. If you find yourself in such a situation, you could be forced to go to a dealer who ‘carries their own note’ or offers in-house financing unless you take advantage of securing financing before you buy. In that case, you are again approaching the purchase as a cash buyer, and will be afforded the courtesy of being able to buy at reduced prices.
The problem with many of the dealerships that offer in house financing is that they have grossly inflated car prices and many require larger than average down payments. Additionally the terms are very often not as good as other types of financing.
There is nothing you can do to improve your credit rating over night, but to help you with all this, there are several steps you can take to help insure that you get the best possible terms on a car loan: