It seems like everyone should know this, but last year 80% of new car buyers still financed their car purchase through the car dealer. Big mistake. First, car dealers are in business to make a profit on everything they do including car financing. The important thing to know is that dealers don’t originate car loans. They work with a lender who gives them a loan at, say, 4% and then turn around and extend the same loan for 7%. If that’s not bad enough, when you finance a car through the dealer, you then have to deal with their finance person who is going to try to talk you into buying a warranty or some undercoating protection. Forget about it.
Instead, before you walk on to the car lot, have your financing in your pocket. The very best place to go for a car loan is the local credit union. Their rates are generally a couple of points below what is offered from a traditional bank. Plus you will always be able to arrange more favorable terms. It’s very easy to shop car loans using the internet. You should know your credit score before filling out an application. Most websites, and certainly bank or credit union reps will be able to tell you immediately what rate you qualify for based on your score and you income.