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Ford Explorer XLS
Auto Loans and Financing
Used Car Buying

Should you get financing through the car dealer?

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2011-09-13 14:06:55
2011-09-13 14:06:55

Its had many benefit for getting finance from a car dealer. Dealership loans are pretty common. In the past, a dealership car loan was one of the only ways to finance a new car. Now times have certainly got changed. One thing is absolutely certain, a dealership loan is convenient. While you sit there and fill out the papers for the car of your dreams that you are about to purchase, you may as well just fill out papers for a loan to finance that very car. Yes, dealership loans really are quite simple, however, sometimes they are not in your best interest. Mainly you get a vast choice to purchase any vehicle though them.

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Yes you should get financing through a car dealer as they can provide you loan at a low interest rates. You will get a higher interest if you finance through a bank. So it would be advisable to finance through a dealer.

AnswerAuto financing obtained by the dealer, even if the dealer contacts lenders on your behalf, may not be the best deal you can get. Contact lenders directly. Compare the auto financing they offer you with the financing the dealer offers you. Because offers vary, shop around for the best deal, comparing the annual percentage rate (APR) and the length of the auto loan.

When negotiating auto financing, be wary of focusing only on the monthly payment. The total amount you will pay depends on the price of the car you negotiate, the APR, and the length of the loan.

Sometimes, dealers offer very low auto financing rates for specific cars or models, but may not be willing to negotiate on the price of these cars. To qualify for the special auto financing rates, you may be required to make a large down payment. With these conditions, you may find that it's sometimes more affordable to pay higher financing charges on a car that is lower in price or to buy a car that requires a smaller down payment.

Before you sign a contract to purchase or finance the car, consider the terms of the financing and evaluate whether it is affordable. Before you drive off the lot, be sure to have a copy of the contract that both you and the dealer have signed and be sure that all blanks are filled in.

Some dealers and lenders may ask you to buy credit insurance to pay off your loan if you should die or become disabled. Before you buy credit insurance, consider the cost, and whether it's worthwhile. Check your existing policies to avoid duplicating benefits. Credit insurance is not required by federal law. If your dealer requires you to buy credit insurance for auto financing, it must be included in the cost of credit. That is, it must be reflected in the APR. Your state Attorney General also may have requirements about credit insurance.

AnswerOne thing most people don't know about dealers is that they can actually add their own points to a car loan. Money made from these points are then kicked back to the car dealer. Usually this is only two to three points but that adds up to a few thousand dollars depending on the size of the loan. This is a multi-billion dollar scam industry wide and they never have to tell you they are doing it as long as the total interest rate percentage is displayed on the lending form.

One way to know that the dealer is trying to add points is when they tell you that you cannot get a lower interest loan because there is something bad on your credit report. It may be fictious or outdated or a flat out lie. The point is to get to you to agree to a higher interest loan. This happened to my dad when the dealer used a bankruptcy that was 12 years old to raise his interest rate.

In short the dealer often makes more from adding points than from the actual markup of the car. With this kind of money they pull out all the stops to get you to agree to a higher loan and it is very hard to force them not too.

Never, ever get a loan through a dealership

Answer

Why can't a dealership mark up the rate and make a profit? Are we not allowed in this great country of ours to operate a business and make a profit? With most customers only willing to pay invoice or cost on a vehicle, where else can we make a profit. Anyway most states put a cap on the amount of rate a dealership can make usually 2 to 2 1/2 percent. If a consumer would pay the Manufacturers Suggested Retail Price or MSRP then maybe we wouldn't have to find alternate means of generating a profit that supports our business and employees. People that have had a bad car buying experience at a dealership generally have brought it on themselves because of their lack of knowledge and understanding. Lets reverse it and put it in your shoes, if you invested $25,000 of your own money into something with the sole purpose of reselling it at a profit, how much would you expect to make? Is a $500 profit a good return on your investment? is $1,000?? $2,000?? "Educate before you negotiate" and your car buying experience will be a whole lot easier and headache free.

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If the financing was being arranged by the dealer he should return your deposit. However, if you were arranging the financing then it is not his fault and depending on the wording of your contract he may be entitled to keep your deposit.

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Why don't you go find your own financing. It is not his responsibility, it is yours. You are the one buying the car.

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the dealera banka credit union

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Most new car dealers will offer to do financing (usually through the manufacturers financing division). However, as with all loans, you must qualify, and your rates will vary.

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You were never approved for financing to buy the car thus you do not own the car and the dealer has the right to his property....so yes they can


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