The vast majority of people in the market for a new car seek an auto loan lender for financing, and a car dealer loan is one of your choices. It is wise to compare your car loan options. If you do some research and acquire competitive car loan terms from an alternative car loan lender, you will be better prepared to negotiate with the dealership. A car loan from a dealership can save you time. You take care of the purchase and the financing all on the same lot. You would be well served, however, to get pre-approved through a different lender. This will, in effect, let you compare their terms with the terms offered by the dealership. Depending on market conditions and the desire of the car salesperson to move some merchandise, you might end up with even more favorable loan terms.
First off, get a copy of your credit score. It's a good piece of information to have anyway, but especially when you are looking for car financing. You won't be surprised by any application denial, and if your credit is stellar, you can expect a good rate. Next, before you head to the dealership, apply online for financing from a third party agent. You don't need to have a car picked out, nor do you need to know exactly how much you will spend. You will be approved for a particular amount with a certain rate. Your comparison starts here because you will want to get at least three quotes from different third party lenders.
So you have your credit report, and you have at least three quotes from lenders willing to give you a loan at a certain rate. Your next stop is a dealership. Shop around a bit and find out if any of them are offering rebates on new purchases. If so, it might be a better deal to finance through the dealer, for the rebates will only apply if you finance through their lenders. You have already been pre-approved by non-dealership lenders, so if the dealer won't give you a better rate, you can always walk away. That, however, might be enough to make them give you an even lower rate, and with the rebate you could be in for tremendous savings.
Assuming you finance through the dealer, when negotiating the terms of the loan, you should make the repayment period as short as possible. This will make the monthly payments higher, but if you can afford it, it is better in the long run because you will pay less in interest. Another good tip is to leave the car on the lot until the final interest rate comes through. This can be hard, especially because the lure of a new car is so great. Should the rate come back higher than you expected, you won't have lost upwards of 20% of the purchase price in value simply by driving off the lot.
Comparison shopping can be very beneficial if you exhaust all of your options. Get approved for financing first, then go to the dealer with a powerful negotiating tool.
