Dealing With Dealer Financing

If you decide to apply for a car loan at an automotive dealership, there are some things you should do to make sure you get the best rates for yourself. Here are some tips to help you work with dealers:

• Make sure you negotiate the best price for the car first. Beware of dealers who insist on asking you how much you can afford each month. They may be trying to make the loan sound more affordable by stretching out the term of the loan. However, the longer it takes you to pay off the loan, the more interest you will pay, and the more your total cost will increase.
• Be aware of any penalties. Some lenders might charge you extra money for paying off the loan ahead of your payment schedule.
• If a deposit is required, be sure you can get the money back if you change your mind. It’s a good idea to get this in writing to protect your deposit.
• Don’t let the dealer talk you into service contracts, credit insurance, extended warranties, or other additional costs if you don’t want them. They are not required, and they can become costly over the length of the loan.
• Be aware of ads that promise loans to people with bad credit. These ads often represent deals which require a higher down payment or which carry an extremely high APR.