Many car buyers might think that the car dealership is offering you the best financing rates. That's not always the case. While you should certainly consider the loan the dealership offers, the best way to get the lowest interest rate is to bring a pre-approved loan from your bank, credit union or third-party lender when you go to the dealership. If the dealership can beat the interest rate, fees and other loan terms you’ve already been pre-approved for, you can decide to take the dealer’s offer. If not, you already have financing.
Bringing your own financing to the table also means you'll have the upper hand when it comes time to sit down with the finance manager. Some dealers will give you a great price on a car, but will charge you a higher interest rate on the car loan, which will cost you more money in the long run. This is an area where dealers can make a profit on the vehicle. With financing in hand, you can focus on the price of the car and your trade-in, if you have one.
Now that you understand the basics of financing a car, you’ll be able to get the best car loan for your budget and your new vehicle.
