Reasons For Popularity And Features Of Auto Dealer Financing
Most people looking for financing their car purchase often opt for dealer financing rather than taking out a loan from the banks or any credit unions. This is because dealer financing is:
- More convenient: Most dealers offer cars as well as financing making it easy for the consumers to get everything in one place. In addition to that, they also work for more hours as compared to the traditional commercial banks. Therefore, you can get their service in the evenings as well as in the weekends.
- Multiple financing options: In order to attract more and more customers having different needs and affordability, the dealers offer multiple options to the consumers to choose from. They have relationships with a large variety of commercial banks and large and small finance companies in order to provide different loan options.
- Special programs: Dealers are often known to offer different unique and attractive special programs that are sponsored by the manufacturers. These low-rate incentive programs are welcome and affordable to the buyers.
However, when you choose one of these programs you must remember that these programs may come with special requirements or limited to specific cars. The special requirements may be:
- Requiring a larger down payment
- Offering a shorter length of contract typically for 36 or 48 months and
- May also require a strong credit score and report.
Therefore, make sure that you check out with the dealers whether or not you qualify for such special programs.
There is one more thing that you should remember. This is, you do not requireto buythose items that the dealers offer with the purchase of your car, no matter how strongly they suggest you do. All these are usually optional.
Therefore, do not buy these if you do not really want these items as that will increase your loan amount unnecessarily and may even make it difficult for you to make your monthly payments. Let the dealer know about your requirements and do not sign for these items when you sign on the loan contract. Check your loan contract thoroughly to make sure that these are not included anywhere in the in contract or in the monthly payments before you sign.
Applying for dealer financing
When you apply for dealer financing, you should check the features of it first and then sign on the contract. Most of the dealers will have a separate and dedicated Finance and Insurance Department. This department will tell you about all the available financing options that are on offer.
Once you choose a suitable financing option according to your need and affordability, the F&I Department manager will ask you to fill up the credit application. In this credit application you will need to furnish different information and details that may include things like your:
- Date of birth
- Current as well as previous address
- Social Security number
- Length of stay at those addresses
- current and previous employer and employers’ details
- Length of employment in each of these organizations
- Total gross monthly income
- Other sources of income and
- Financial information on current credit accounts as well as your other debt obligations.
In addition to that, the dealerships, in most of the cases will also get a copy of your credit history in order to know other essential aspects before loaning the money out such as:
- Information about your payment record
- Your current and past credit report and
- Any data available from the different public records such as a bankruptcy filing from court documents.
That is not all. They will also require your current credit score to determine whether or not to lend you the money, how much to lend and all the terms for the loan.
You may also check out from sites like https://www.libertylending.com/ or any other about the requirements beforehand so that you can compare things in a better way and know what to expect and what you need to carry to the dealerships when you file for a dealership financing.
Features of dealer financing
Dealership financing may come with different features that keep on changing from time to time.
- Manufacturer incentives: Dealers offer different manufacturer incentives from time to time. These may come in different forms such as cash back on specific make and model of cars or reduced finance rates. Therefore, make sure that you ask the dealer about such manufacturer incentives on the specific model of the car you are interested in. However, thediscounted rates are usually not negotiable and are limited by your credit history.
- Rebates and discounts: Dealers also come up their own rebates, discounts special prices and other offers. Ask the dealer if you qualify for any such thing. If you can avail these, it will reduce your price significantly as well as the amount you finance. Dealers that promote discounts, rebates and special prices on part of your lease typically needs to explain the requirements explicitly in order qualify for these incentives.
- Restrictions: However, there may also be some restrictions on the special offers and discounts that you should look very closely to. It may be restricted to a member of the military or for a fresh college graduate or may even apply to specific cars only. You should never assume that the rebates and discounts are already included in the terms or price of the loan you are offered with. Therefore, be specific and ask the dealer about it.
- The Annual Percentage Rate: APR or Annual Percentage rate is another thing that you should look for in a dealer financing. If there is no special financing offers available to you, you should usually try to negotiate on the APR as well as the terms for repayment with the dealership in addition to negotiating about the price of the car.
Lastly, dealer financing comes with attractive terms and conditions as compared to any traditional auto financing. Check out these before you finally choose an option suitable for you.
Therefore, spend some time on your research to make the most out of dealer financing when you want to buy a car on loan.