If you’re looking to buy a new vehicle, you’ll most likely want to finance it. But good news! It’s not nearly as daunting as it might sound.
Every year, tons of people finance their vehicles. In fact, according to the Federal Reserve Bank of New York, over 107 million Americans pay for their vehicles with auto loans. If you’re a financially cautious person, your gut instinct might equate financing with long term payment plans, paying extra in interest, and at worst, getting into debt. Fortunately, the automotive industry has learned how to create payment plans that not only fit your budget, but cut costs far lower than you might expect.
If you’re looking to become one of the many Americans who finance their vehicle, here’s some of the cool ways your dealership can save you cash.
First, a little behind-the-scenes look at how your dealership does business. Dealerships create financing contracts by basically creating loan agreement with financial institutions. In other words, think of them as very well-qualified middlemen between you and a bank. Except we’re talking a heavy emphasis on “well qualified.”
Since dealerships have so much experience with negotiating with banks, they can argue aggressively on your behalf for the best terms and interest rates possible. And since they have a lot of options for financial institutions, they’ll find whoever can cut you the best deal possible. After all, since your salesperson is the one who’s presenting the terms of the contract to you, they want to be able to put their best foot forward to earn your business.
In other words, though you could try to negotiate a bank loan to buy a car yourself, your dealership can basically do this task for free and get you an even better contract in the end. And speaking of getting you a better contract, dealerships have another great trick up their sleeves to save you money.
Car manufacturers frequently run promotional discounts on their vehicles. These are often hundreds, if not thousands of dollars off the MSRP. And oftentimes, these promotions are tied to financing. This gives dealerships a unique opportunity to give you a financing agreement that’s significantly lower than what a bank could offer you. When you hear car commercials offer promotions like “0% APR financing,” these are the kinds of deals that make these promises possible.
In a best case scenario, you could spend less on a vehicle financing than if you bought the vehicle outright with cash. But even if you can’t reach that specific goal, you can still walk out of your dealership with a great vehicle and a payment plan that’s squarely within your budget. Though every customer is different based on their credit score, your dealership will work as hard as they can to give you the best financing agreement possible. You’ll rest easy knowing that you got the best possible deal on your car without any hassle required.