Last year 15.6 million vehicles were sold in the US, the majority of which were financed by a lender. Many americans believe that the only option to walk away with a new vehicle is to take whatever finance lending is thrown their way during the car signing, and dealers would like to keep that thought in your head.
It is possible to get a good deal when financing through a dealership, but you must be very careful when signing at the dotted lines. Commission is made by the dealerships with each deal they bring to the lender so its very common for them to try and pressure you into signing a loan that may not be the best option for you.
Always determine which lender the dealership is working with and make sure they have a good reputation in the industry. You do not want to deal with a shady lender only to have issues down the road.
Check the interest rate that you are being offered. If a dealership is trying to clear out inventory it is possible to get a good rate but often they will only give these rates to people who have stellar credit. If you have a less than perfect credit score, you will most likely get charged an exorbitant interest rate and will end up spending a lot more money of the loans term than if you were to go elsewhere.
Make sure to read all aspects of the loan terms. Often fees will be charged when you accept a loan, some of which might be overlooked. Also be sure you will not be assessed a penalty if the loan is paid off early.
Credit Union Financing
There are a number of benefits to obtaining your auto loan with a credit union. First and foremost is convenience. You can apply for your loan before you go car shopping, and will have a preapproval in your hand. This leaves you with a great understanding of what you can afford, and saves you a potential awkward moment if your dealer financing was to get turned down.
A credit union can often provide a lower interest rate for you which results in a shorter loan term, saving you money. If you have other products with the credit union, this can also help lower your interest rate. Bringing all products under one roof creates for hassle-free monthly payments, letting you enjoy your car without added stress.