4 ways to beat dealership finance

When people buy a car these days, many will use some form of finance.

While using finance to purchase a car can help you get the vehicle you want now, it’s important to make sure you’re properly comparing loan options and not just taking what a dealership has to offer.

Here are four ways to improve on dealer finance.

Don’t be fooled by new cars

Used car dealers can at time have a bad reputation and many buyers will have their guards up when buying a second-hand vehicle. However, it’s important to take a close look at any finance being offered from a new car dealership as well. It’s always worth comparing any finance on offer with the help of a finance broker rather than just assuming dealership finance is your best option – especially on new cars.

0% or low interest rates

If a deal looks too good to be true, then it probably is. This can often be the case with low introductory offers from dealerships. Typically, a loan product with a low introductory rate might come with higher fees or other higher rates at some point in the future. Be sure to read over the details of the contract prior to signing. It’s also worth looking at the details of any dealership finance offer well before taking a car for a test drive.

Base rate vs effective rate

When comparing any loan product, it’s important to examine the interest rate and compare it to other loan products. Sometimes, dealers might quote you the base rate which could vary substantially depending on the way it is structured. It’s far more important to look at the effective or comparison rate to get a clear idea of what you are going to be paying in interest. If in doubt, use a dollar figure to gauge and compare.

Pre-approval

The most effective way to make sure you’re getting a good deal on a loan product is to have already compared the different options from numerous lenders. Generally, the best way to compare loans is with the help of an independent mortgage broker who can help identify suitable products. Taking this one step further, a mortgage broker can help you get pre-approved for a loan which you could then compare to the dealer’s financing offer.