Get Preapproved For Car Finance Before You Visit a Dealership

Unless you paid cash for your car or had an existing loan that was paid off, chances are you borrowed at least some of the vehicle’s cost from a lender. The dealer may offer its own in-house financing or an auto loan from a bank, credit union or an online auto marketplace. Getting preapproved for a loan before visiting the dealership gives you a strong negotiating position when it comes to the price of your new car.

If you have a good credit score, the best way to save money is by getting your loan through a direct lender before you visit a dealership. These lenders, including banks, credit unions and online auto loan marketplaces, can give you competitive interest rates, allowing you to compare them with the dealership’s offering.

The average new car loan now stands at about $40,200 according to Experian. A longer loan term, which can range from 24 to 84 months, lowers the monthly payment but adds up to more in total interest payments than a shorter one.

Be careful when it comes to rolling in extras like taxes, fees, warranties and service contracts. It’s better to pay these upfront, if possible, to avoid adding to the total loan amount. If you must finance a car with these items included in the vehicle price, try to get the shortest term that fits your budget. Also, be sure to review any manufacturer rebates and other incentives before you shop, as some dealers will add them to your final sales number to boost their profit.  car finance