Publish Date - October 08, 2021
Author: Greg Thibodeau
9 Reasons to Explore Auto Financing Before You Shop for a Car
The next time you’re in the market for a new vehicle, explore auto financing before you shop. It will give you more confidence, ensure you don’t shop outside of your means, and put you in a better position to get the best deal.
Buying a car can be a fun and exciting experience. Unfortunately financing a car is often anything but a good time. The uncertainty of what vehicle is within your means and high pressure sales tactics can make it an overwhelming experience under those showroom lights.
Uncertainty of where your finances stand can leave you at the mercy of ruthless salespeople and prone to making mistakes. Next time you’re in the market for a new car do your homework ahead of time and walk in prepared. Here are nine good reasons why you need to explore auto financing before you shop for a car.
1. Convey That You’re An Informed Buyer
Showing up with your financing in order demonstrates to the salesperson that you are familiar with the car purchasing process. It shows that you have thought this through and are ready to make informed decisions. A dealer might think twice about trying to manipulate you during negotiations and you’ll end up with more control.
2. Understand Your Interest Rate
If you are looking to borrow money, you will likely be charged a fee for that service. This fee is the interest rate that you will be charged for your loan. The interest rate that you are charged is based on your credit score which is affected by your borrowing history. A high credit score indicates that a borrower tends to pay back money they owe in a timely manner while a low credit score shows that payments on previous loans may not have been made on time. The credit score represents the level of risk for the lender. Low risk individuals with a high credit score are offered lower interest rates than their high risk counterparts. Knowing the fair market interest rate for you will prevent you from signing an unfair financing offer.
3. Design Loan Terms With The Right Fit
If you explore auto financing before you shop you’ll have time to look around, compare offers, and design loan terms that fit your needs and budget. The interest rate that you are offered, the amount you borrow, and the terms of the loan will determine your monthly payments. You know best what you can pay and how much cash your budget can afford to part with each month. Play with the numbers such as loan length, down payment, and car price to see how they affect your payments.
4. Demonstrate That You Are A Serious Buyer
Most car salespeople don’t like to waste too much time on shoppers who are only there to browse. Showing up at the dealership with a plan on how you’ll pay for that car shows that you are serious about buying. Sales staff will give you more attention and be eager to answer all of your questions if they know that you’re ready to make a purchase.
5. Shop Knowing What You Can Afford
If you explore auto financing before you shop you will have a better idea of how much you can afford to spend. You will know how much you can borrow ahead of time and the price range that you need to stick to in order to end up with manageable monthly payments. Step into the dealership with realistic expectations and don’t get distracted by all those flashy cars.
6. Come To The Table With A Stronger Position
There are three separate transactions to the traditional vehicle purchase. They consist of an individual purchasing a car, the dealer purchasing a trade-in, and the individual purchasing financing. If you combine any of these transactions there’s a good chance that you won’t be getting the best deal possible on any of them. Once you decide on a car and pick out all its options it’s going to be hard for you to walk away and the dealership knows this. If you take auto financing right out of the equation the car dealership won’t be able to pressure you into financing terms that aren’t such a great deal.
7. Force The Dealer To Bring Their Best
Most dealerships offer financing of their own which they will try to sell you. If you come in with options already lined up the dealership will have to compete for your business. Your salesperson will know that the only way that they can get you to finance with them is if they offer you a better rate. If they do make a better offer you can take it but just make sure they are offering no less than equal terms.
8. Fix Your Credit Before You Commit
Explore auto financing before you shop to identify credit problems ahead of time. Since higher credit scores usually mean lower interest rates it might be worth the wait to delay purchasing a new car until you can improve your credit. A simple way to improve your credit score is to pay your bills on time. Some steps you can take are creating a filing system to manage your bills, setting up due-date reminders, and automating bill payments from either your bank account or credit card.
9. Focus On The Car
It can be taxing to walk into a dealership uncertain of what you can afford and unsure of how to spot a bad deal. If you take the stress and hassle of car financing out of the equation, you will be able to devote all of your attention to the car. Shop with a clear mind and purpose and end up with the car you wanted at a price you can afford.
The next time you’re in the market for a new vehicle, explore auto financing before you shop. It will give you more confidence, ensure you don’t shop outside of your means, and put you in a better position to get the best deal. It can make all the difference and turn a bad shopping experience into a great one.
Not sure where to begin? Get started at myAutoloan.com. Our handy tools will help you figure out how much you can afford. Compare your financing options quickly and easily to save money and shop like you mean it.