One of the most important things you face when buying a new or used car is how, when, and where to finance the purchase. The financing choices you make have an effect on everything from how large of a loan you can get, to the interest rate you receive, all the way down to the bargaining power you have when negotiating your settlement.
Far too many people simply assume they’ll just finance the car when they buy. While this is certainly a popular option, it’s rarely the best way to go. Explore the reasons why it’s far better to get pre-approved for a car loan and obtain that money before you even walk into the dealership, and where to go for options.
Why You Should Get Your Car Loan First
Get a Lower Rate
Financing at a dealer is a convenient way to go, but it carries one important drawback. You take what you can get when you go with what’s right there. If you take the time to shop around before going in to buy, you can often get a much better interest rate—up to a couple percentage points lower than if you just finance through the seller.
Help Determine Your Budget
Getting preapproved is a great benchmark to tell you what you can afford. You might think that a certain loan amount is do-able for you, but if your pre-approval comes back lower, that could be a sign that you should perhaps shoot lower. On the other hand, maybe you’ll find out you can afford even more car than you thought! Don’t forget you’ll have upkeep and insurance costs to consider, too.
Make the Process Go Smoother
Having the money in hand can make the process of buying a car go much smoother. It removes an entire element from the buying process, so it can save a significant amount of time. The dealer will also view you as a cash buyer, which makes them a bit more eager to sell you the vehicle, and less likely to put up a hard fight for the features and options you want.
Set a Strong Bargaining Position
This puts you in a far better negotiating position when it comes right down to it. If you’re able to simply walk away and go somewhere else, you set the tone for negotiations. You can also ask the dealer what they can do to beat the interest rate you’ve got.
Rather than trying to nail you with monthly payment negotiations, you can simply focus on the price of the car itself. Finally, having the money in hand lets you deflect add-ons that will inflate the final price. Just say, “my budget is set, I’m a cash buyer, and that’s all there is to it!”
When it comes time to get pre-approved for a car loan, shopping around is your best bet. At Blue Sky Auto Finance we offer resources for borrowers with good credit, bad credit or no credit at all. Even those with bankruptcy in their past can get financing through our site. Check out our simple three-step process and get started today!