For buying a new car, you can opt for a number of sources for financing it. Dealer financing is one among the different options that are available. As the name suggests, this type of finance is provided by the dealers to the customers on behalf of a third party or a lending company. Dealers grant the credit directly to the clients and then sell the credit to the bank or any other lending agency. This procedure is contrast to that of seeking direct financing from the financial institutes, where you can get the loan directly from them. Dealer financing is convenient for the car owners as you can get the finance and the car from the same place.
Mention terms in the contract
Dealer financing has a gamut of advantages attached to it. You can negotiate with the dealer regarding the rate of interest, loan terms and other features of the loan. Make sure that the final amount and the rate of interest are mentioned in the contract. Refrain from signing a contract if the detailed information is not laid out in the contract. Do not opt for a fluctuating rate of interest that might change over the loan term. It is always important to determine the exact amount of the monthly installment that you need to pay.
Verify the rebates offered by manufacturers
The loan term is also another important issue that you need to consider. The contract might cite that you have to pay low monthly installment, but the important point is the duration of the pay. Avoid going through the contract make sure that you have no statements like “subjected to approval” or the likewise. While going through the invoice, identify the areas where you can reduce the price considerably. There are few rebates that manufacturers provide the customer directly. These rebates are often not part of the packages that are offered by the dealer.
Avoid extended warranties
Extended warranties and charges for the protection of rust, fabric and paint of the car are also levied on the loan amount. According to financial experts, in reality, there is no need of any extended warranty as the vehicle’s factory warranty is enough to cover the different aspects of the car and you do not need anything extra. In dealer financing, the car owner has to pay the dealer a low rate of interest and also additional charges that accounts for their profit from the transaction. The application of financing is approved by the lending agencies and the documents that you need to submit are scanned by them.
Benefits of dealer financing
Owing to a number of benefits car owners tend to opt for this form of financing. The best part of this loan is that it is not time consuming. You need not have to visit various lenders for the loan as the executive at the car dealer will take care of the various nitty-gritty that are part of this process. After you have provided them with the required documentation, sale staff at the dealer takes care of the paperwork, especially the contract. If you wish, you can also opt for the option for cash for junk cars to buy a new car.
Wide array of options offered
Since the dealers have relationship with various lenders as the banks, credit unions and other financial institutes so they can provide a wide array of services to the customers. Since often manufacturers sponsor many of the programs, you can also get these offers at low rate of interest. Even if you have a bad credit, you can also apply for this finance. You need to keep low deposits for this loan as the same can be tailored as per the need of the customer. Well, with high deposits, you can lower the amount of monthly installment.