It’s no secret that when you’re buying a car, the dealership will try to get you to finance through their in-house loan program. And while there’s nothing wrong with that per se, you’re almost always better off securing your own auto loan beforehand.
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Here’s why:
You can shop around for the best interest rate.
The dealership’s goal is to make as much money off of you as possible. That means they’re not going to give you the best interest rate on your loan. By shopping around for a loan before you go to the dealership, you can ensure that you’re getting the best interest rate possible.
You can use the loan as leverage.
If you already have a loan lined up, you can use it as leverage when negotiating the price of the car. The dealership will know that you’re not beholden to their financing, so they’ll be more likely to give you a better price.
You can avoid being upside down on your loan.
If you finance through the dealership, there’s a good chance you’ll end up being upside down on your loan. That means you’ll owe more on the loan than the car is actually worth. This can be a real problem if you have to sell or trade in the car before the loan is paid off.
You can get pre-approved for a loan.
Getting pre-approved for a loan gives you a few advantages. First, you’ll know exactly how much you can afford to spend on a car. Second, you’ll be able to shop for a car without worrying about whether or not you’ll be approved for financing.
You can take advantage of 0% financing deals.
Sometimes, you can find 0% financing deals on new cars. If you have your own financing lined up, you can take advantage of these deals without having to worry about the dealership’s interest rates.
The bottom line is that it’s always best to secure your own auto loan before you go to the dealership. By doing so, you’ll be in a much better position to get a great deal on your next car.
