Auto Finance

Oak View Law GroupHow Auto Financing Works

If you have read How Buying a Car Works, you find out the car-sales lingo and the pros and cons of working out with a skilled car salesperson.

Let's say you have combated for the best deal and ultimately accepted the price you can live with. Now it's time to breathe a sigh of relief?

Not exactly. Did you know that if you finance a new car through the dealership, the finance person is working on commission base?

It means that the financing deal you get is still up in the air, although they will never tell you that. Those things that get added in the last steps of the deal such as alarm system, undercoating, extended warranties etc. are usually what the dealership makes the most money on.

It's the finance person's job to upsell you on those items once you have accepted a price for the car with the salesman.

In this article, we will cover the options you have for financing, what identifies the interest rate you get, and ways to determine if you are really getting the best deal, in addition to some scams to watch out for.

We will even give you a cheat sheet to have with you when car shopping to assist you to figure out things like whether taking the discount or getting the zero-percent interest deal is best for you.

If you feel like most people, paying cash to buy a new car just isn't really in the realm of possibility. And even if it remains in the realm, you may not want to exhaust your savings account to buy a new vehicle.

This means that you are either going to be leasing the car, or buying the car by financing. If you are purchasing, then you are most likely financing it through the dealer, credit union or a bank, an online financial services, or maybe even a family member.

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While leasing is suitable for many situations, it's a completely different animal, so in this article, we are focusing on financing. If you know you wish to finance your car instead of pay cash, then you have to do your homework and decide how you can get the very best financing offer.

  • If you do have the cash to pay for your car and are thinking about doing it, how do you know if it's really the right thing to perform? Here are some circumstances when paying out cash really is in your benefit.
  • If you could pay more interest by financing that money than you could earn if you invested it or kept it in a savings account of some sort.
  • If you don't have a very good credit rating and would have to pay a high interest rate to finance, more on this later.
  • If you have a bunch of debt already but enough cash on hand, and don't wish to even more damage your credit rating.

But if you're like the majority of people, you probably need to finance your car, and you are just looking for the best rate!