Car Dealer Financing

It may be much convenient to finance through the dealership since you buy and finance your car from the same place but if you choose car dealer financing you should be a little more cautious for certain things.

• The first thing you should watch for is the car financing terms.

  This includes the interest rate (which is usually a bit higher at the dealership), the rebates, the term of the loan and monthly payments. Try to negotiate lower interest rate and make sure it doesn't change during the course of the loan. Check if there are any prepayment penalties. And don't be fooled into getting lower monthly payments for the exchange of a significantly stretched loan term.

• Don't be in haste to buy insurance from the dealer.

  While you are financing at the dealership you will probably be offered insurance too. However, carefully consider whether you really need the insurance offered and whether you have to get it from the dealership. Most likely you will be able to get better rates if you shop around.

• Make sure you need the extended warranty.

  Probably, you will be offered extended warranty on your new car. You may not really need the extended warranty since nowadays warranties that come with new cars are often comprehensive enough. Therefore, if you decide that you need it at least compare the prices offered by other sources.

• Watch out for unnecessary extra services.

  Make sure you don't pay for anything unnecessary. For example, many dealers will offer undercoating and rust protection. However, these two are usually already applied at the factory, so why pay for them again? If they are already on the car, at least try to negotiate them down.

• Watch out for unnecessary extra car features.

  Surely, you may need alarm systems and window etching. But are you aware that dealers charge significantly more for such systems than what you will pay if you choose to install them at a reputable auto shop? Again, if such systems are already on the car, try to negotiate them down to a more reasonable level.

Arranging car dealer financing may be convenient but this doesn't mean that you have to pay much more for it. Just be careful what you are offered and what you pay for - after all it is your hard-earned money.

The information on this site and the car loan calculators provided are intended only to assist you with your car loans decisions without providing any personal investment advice. Since we do not consider your personal financial situation, we cannot and do not guarantee that the information provided here will be applicable or accurate to you. We advise you to seek personalized professional advice regarding your personal situation.

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