How to Get Financing at Your Car Dealership


Most car dealerships have a special department set up to assist car buyers with the financing of their car purchase. A dealer considers the finance department to be a source of additional profits when cars are sold.

A car buyer should understand what the dealer financing can and cannot provide.


How to Get Financing at Your Car Dealership

How to Get Financing at Your Car Dealership


1. Determine the type of car you want to buy and how much you can afford for a down payment and monthly payment.

2. Estimate the car price for your budget using a rule of thumb of $5,000 for each $100 of payment for a new car, and $4,000 for each $100 on a late model used car. For example, if your payment budget is $350 for a new car, 3.5 times $5,000 gives a target price of $17,500.

3. Tell the car salesman what your price range is and that you plan to finance your car purchase. The salesman will ask about your payment expectations and if you have money for a down payment. As a negotiating tactic, tell the salesman you want to see the best financing deal you can get after you have picked out a car.

4. Select the car you want to buy and make sure the price is near your target price range. You will then have to negotiate the price and financing arrangement.

5. Complete a credit application with the salesman and tell him the amount of your down payment and that you want to see the best payment plan possible.

6. Negotiate with the dealership sales staff until you are satisfied with the car price and financing details. In negotiating, you should keep asking for a lower price and lower monthly payment. Make sure you get the rate of interest for the loan and the number of payments. Once you have agreed on price and financing terms, the dealership will complete the documentation required to get you the car loan.


Tips & Warnings

  • For a new car, the number of payments should be a maximum of 60. On a used car, look for 48-month financing.
  • Check on current auto finance rates before you go to the dealership. Check with your local bank or credit union, the newspaper finance section or one of the auto websites like Kelley Blue Book or Edmunds.
  • If you have a bad credit history or have not established credit, you will pay a significantly higher rate for a car loan.
  • Do not take the car from the dealership until they confirm you are approved for financing at the rate and payment on which you agreed. If the lending institution does not approve your application, you may have to put up a larger down payment, pay a higher rate or bring back the car. A signed loan contract does not mean you are approved. Get verbal confirmation from the dealer finance department that you are approved as agreed. If you are not approved, tell the dealer you will come back for the car when the financing is approved.


Purchasing a Car

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