How to Purchase a Car With Dealer Financing

How to Purchase a Car With Dealer Financing

Stereotyping is not nice. We all know that, but there’s a reason why a “slick dealer” is often referred to as a “used car salesman.”

Part of that reason has to do with misrepresenting cars, but another part of it has to do with financing. They have enough ways to juggle the price of the car, the price of your trade-in, and the associated fees to keep anyone’s head spinning.

Of course, they’ll say all their number jugging is in your best interests – perhaps to make it appear that you have a larger down payment – or that you even have a down payment. Often, they’ll tell you the car you’re trading in isn’t worth any more than you owe, but they can pretend it is…

So pre-arm yourself before you step foot on a car lot. The first thing you should do is order a copy of your credit report and look at the scores. If you don’t know your own scores, the dealership can tell you anything – and some of them will. Then they’ll quote you a higher interest rate based on your “low credit scores.”

If your scores really are low and you can see some ways to bring them up – do it before you go shopping.

Next, don’t let anyone check your credit report until you’re actually ready to buy. Checking 2 or 3 lots over the course of a few days will only count as one inquiry, but if you shop now and then wait 6 weeks to buy, your earlier shopping will have harmed your credit score.

Now for the questions you must ask:
• What is the actual cost of the vehicle?
• How much am I financing after I pay $X down?
• What is the true APR on that financing?
• What is the total number of payments?
• What is the exact amount of each payment?
• And that adds up to … how many dollars in finance charges?
• Are there any fees you haven’t yet disclosed?
• Are you requiring credit insurance? If so, what does it cost?
• When I drive off your lot, is this purchase finalized?

That last question seems odd, but it’s an important one, because it can catch you unawares.

Many car dealers engage in a version of “bait and switch.” They send a new owner home with a car and a loan. Then in a day or two they call and say they’re terribly sorry, but the lender refused to make the loan. …But don’t worry, they’ve found someone else who will. Of course, the rate and the payment are a bit higher, but…

Don’t go for this. Unless you see documents that spell out every one of the terms of your loan, and unless you feel confident in an assurance that this is the FINAL deal, don’t take the car off the lot. Make sure you know who the lender is, and that you see their approval – in writing.

This “bait and switch” tactic is known as the “puppy dog close.” The dealer knew that you wouldn’t agree to pay a high interest rate right off the bat, so he didn’t even try. Instead he sent the “puppy” home with you for a couple of days – just long enough that you wouldn’t want to part with it and would go along with the rate and terms he intended to give you in the first place.

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Author:Marte Cliff your resource for free credit reports, credit cards, loans, and ground breaking credit news

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Disclaimer: This information has been compiled and provided by as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.