HOUSTON – Shopping for a car is not what it used to be. Buying a car is a big-ticket purchase where you can save money if you do your homework. With the national shortage of vehicles, now more than ever dealerships are trying to make money on the financing side of the deal as well.
“What you need to do is, just like making the dealerships compete on the sales side of it, you also have to make them compete on the financing end of it,” said Mike Rumple, Your Car Buying Advocate.
Mike Rumple with Your Car Buying Advocate helps people save money when buying a car. He’s a former car salesman, so he knows a thing or two about saving money.
- Get pre-approved for a loan.
Rumple said before you even go to the dealership, you should already know what the interest rate is and get pre-approved for a loan. Credit unions typically give the lowest rates. Then you can use that to negotiate what the dealership might offer for financing.
“They’re going to be able to give you a good rate. You just have to make them aware that you know what a good rate is,” said Rumple.
- Negotiate the financing AFTER you’ve already negotiated everything else.
Rumple said the dealership is going to try and lump the entire process together. The best way to do it is to negotiate the interest rate and how you’re going to pay for the vehicle at the end separately.
“So what the dealerships are going to claim as well, we don’t choose the rate. Okay, the rate is what it is, it’s based on your credit score, which is somewhat true. But they also make, they can also get you approved for a rate and then mark that interest rate up 1% or 2%,” explained Rumple. “They make a profit from the bank. On that interest rate.”
The best deal on the sale price of the car might not be the best overall deal. You have to worry about the financing.
- Read the fine print of any offer.
Rumple says watch out-- you need to read the fine print of any offer that sounds too good to be true.
“Somebody might say to you, ‘Well, yes, we have 0% financing available but in order to get that, you lose $1,000 worth of rebates,’ for example,” explained Rumple. “So that doesn’t necessarily mean that you want the 0%, right.”
Sometimes losing rebates but getting 0% financing doesn’t end up being a good deal in the long run.
- Buying new might actually be cheaper.
You may have heard used vehicles are selling for high prices right now. Rumple says because of the high demand for used vehicles right now, buying new might actually save you money because interest rates for a new vehicle loan are typically lower. [For more information on saving money on a new car, check here.]
- Check with the car manufacturer.
You can also check directly with the car manufacturer for deals they are offering.
Rumple said you should always use a car payment calculator to see the various payments you may end up having. Several websites offer auto loan calculators.
BONUS: Rumple looks into how car buying websites may try to get extra money from you. Rumple knows so much about the car industry because he is a former car salesman. Car dealerships don’t want him sharing their secret sales tactics. They’ve even threatened to sue him for it.