Visiting a car dealership for the first time can be scary and exciting. You have been saving for a down payment and the time has finally come where you can afford to buy your dream car. But all consumers should take time to understand how car financing works before they take that stroll into the finance office. Knowing how car financing works inside the dealership is like knowing what goes on behind the scenes. By understanding the process, you will feel more confident as you sit in the comfy chair and discuss how much you are willing to pay each month to own the car of your dreams.
Dealer Financing is the Most Popular Option
Before make your way to the dealer lot, you should understand that there are a number of different ways that you can finance a car. You can apply for financing through your bank, your credit union, or even take a cash advance off of your credit cards. But dealer financing is often the most popular option because the dealer has connections with so many lenders who are just waiting to offer you a loan.
Dealer financing is the easiest and most convenient way to find a loan that suits you. You simply walk into the finance department, fill out a single application, and the finance representative will find an approval for you no matter what time of the day you are closing the deal. Because this finance manager makes commissions on the loans they process, they often fight for you even when you have poor credit. For individuals with blemishes on their credit, dealership financing may really be the only option.
Who is Financing Your Loan?
A car dealership is in business to sell cars, not make loans. While the dealership does have a finance department, this department works with a network of preferred lenders. The dealer is not the one writing or approving loans. Typically, if the applicant has good credit, the finance department will send the application through to a captive lender of the manufacturer. If the applicant has poor credit, the finance manager will assess other options and send the application through to sub-prime lenders willing to take on more risk.
Running Your Credit Reports
It is very common for a dealer to run your credit report before you even test drive a car. This gives the salesman an idea of whether or not you will qualify for a certain type of car. Knowing what you qualify for before you get your hopes up is a great way to save your own time when you are on the car dealership lot.
The Dealer Does Not Approve Loans
While finance managers do discuss underwriting with the lender, the manager has no say in whether or not a loan will be approved. The dealer will simply fax paperwork to the lender and the lender will verify documentation. In many cases, the loan is approved before you walk out the door. In some cases, the loan is not approved immediately but you still can drive the car off of the lot. If the dealer is unable to find any company willing to finance you, you may be asked to return the car.
Dealer financing is very convenient and gives you several different options to choose from. You should always take time to shop your options before you commit to a long-term auto loan. Look at more than just the interest rate and be sure to use your negotiation skills to talk down the rate of your loan.
When Monica Lasalle was ready to buy her first car, she needed to understand what it meant to finance her car. When she needed advise, she turned to the professionals at Volvo Jaguar Land Rover of Windsor 1150 Provincial Road Windsor, ON N8W 5W2? (519) 972-6561. They provide the type of quality service on new and used cars Windsor Ontario and the surrounding areas can count on.