Very rarely is someone able to pay for a car without obtaining an auto loan. Most of the time, the buyer will need to borrow at least part of the money. Fortunately, for the most part, auto loans are fairly easy to get, and there are many different ways to obtain one.
Many car dealerships have a “working relationship” with certain banking institutions, and may even have an “on-site” representative to discuss your auto loan with you. Talk to the representative, if you wish, and find out what interest rate is being offered. It may be the best one you find; but, then again, you might be able to find a lower one.
Or, you may wish to deal with the bank where you have your checking and savings accounts. They may offer certain terms and interest rates to established customers.
If you are a member of a credit union, you may be pleasantly surprised to find that the auto loan terms offered by that establishment, especially for used cars, are by far the best. If you are not a member, you might wish to look for a credit union with “open membership” (that is, you do not have to be affiliated with or employed by a certain company or organization in order to be a member), and talk to them about an auto loan.
Some independent loan agencies also offer auto loans. Their terms and interest rates may be very different than other places; however, so make sure you pay close attention to what is being offered.
Don’t hesitate to make a lot of comparisons between different financial institutions. A car, especially a new one, is a major investment, and you want to get the best deal possible, both from the car dealer and the financial institution.
If you are buying a new car, you can most likely go ahead and reach a price agreement with the sales representative, then take that figure to the financial institution where you will be obtaining the loan. If you are purchasing a used car, however, you will probably need to go about it a little differently.
Your best bet will be to write down the make, model, color, condition, and odometer reading for the used car, as well as the asking price. Once you have obtained all this information, take the figures to the financial institution you will be or are considering using, and have them check the asking price against the actual value of the car.
The reason for this is because the financial institution will have car value information that you may not have access to, and can tell you immediately if the asking price is too much. Further, at that time, the financial institution will most likely tell you that they can (or will) only loan a particular amount of money for the type car you are interested in purchasing.
Some financial institution representatives, especially when making used-car auto loans, will actually call the dealership and tell the salesperson (or sales manager) that they will only loan a certain amount for the vehicle. If you are fortunate to have a “friend” like that (and believe me, someone that will do this for you is a friend), consider yourself blessed.
The salesperson cannot (or at least should not) try to change the price on you, and the representative and the financial institution will already have completed the majority of paperwork on the auto loan itself. This, in turn, will mean savings in both time and money for you.