How to Finance Your New Vehicle

One of the questions that you will face when you purchase a new vehicle is how you plan to purchase the vehicle. There are a variety of different options which are available to you. While you could buy the vehicle outright and make a single cash payment, most people do not have the financial standing to do that. This means that financing is the most realistic option for most people. When you choose to finance the vehicle, you can decide to finance it through the dealer or seek out your own financing.

Many people often become trapped in the dealer finance offer for one reason and one reason only; it is convenient. Rather than taking time off from work many consumers choose to shop for a vehicle on the weekends and on the evenings. When they find a vehicle they want to purchase, they invariably want to drive it home immediately and do not want to wait until an alternative lender is open to obtain financing through another source. So, they finance the vehicle through the dealer's lender. Unfortunately, consumers fail to realize that they actually pay for this convenience in higher interest rates and increased fees.

Patience can not only be a virtue but it can also save you quite a bit of money when you are willing to shop around for the best financing offers for your new vehicle purchase. Many real estate professionals recommend that home buyers become pre-approved and line up their financing before they actually begin to shop around for a house. The same strategy can also be helpful when you are in the market to purchase a new vehicle.

Not only will you typically be able to negotiate a better interest rate when you choose to arrange outside financing but you may also find that you can negotiate a better price on the car as well. When you arrange financing through the dealer, the financing will be based on the price that has been negotiated for the vehicle. This negotiated price takes several factors into consideration, including the amount that you pay down on the car. The actual amount that you pay for the vehicle can vary based on down payment amount as well as monthly payment and interest rate when you finance through the dealer's lender. As a result, the exact same car might end up costing you more if you finance it through the dealer than the same vehicle financed through an alternative lender.

If you arrange financing from an alternative source, it essentially allows you to function as a cash buyer. The dealer need not be concerned with your financing arrangements. All you have to do is settle on a price with the dealer without worrying about the down payment or any other factors. Once that price has been settled, you can then simply make the payment to the dealer and drive your new vehicle home. All financing details can be handled between you and the lender that you have selected.