Why You Should Always Finance Directly with a Bank
Most car dealers have relationships with banks, but you shouldn't let them arrange the financing unless you're willing to pay a fat commission.
This commission is called "finance reserve" and it could end up costing you over $2,500 on a 60-month loan.
If you're going to finance through a bank, make sure you do your paperwork at the bank, not at a dealership. Many people don't know this, but you can negotiate the rates directly with a bank.
First, you should comparison shop online for the best finance rates, then use those rates as a bargaining chip with the bank. See if they can beat your best rates.
You should also shop your rates to credit unions.
Some banks will give special loan rates if you have a long history with them, or if you already have a checking or savings account. You should contact all banks where you already have a relationship in place.
After you comparison shop your auto loan, your final step is to have the dealer try to beat your best rate.
There are cases where a dealer will beat your lowest rate (even if they arrange it through a bank), so you can rest assured you're getting the best auto loan possible - but only if you already took the time to shop around directly with the other finance sources.
My Recommendation for Car ShoppersTrueCar No-Haggle, Edmunds Price Promise and 1-800 Car Show are the quickest way to see the lowest car prices in your area. These sites show you no-haggle prices from dealers closest to you - and the deals are usually really good. This should be the first step you take when negotiating your car price. Follow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan
About: Gregg Fidan
Gregg Fidan + is the founder of RealCarTips. After being ripped off on his first car purchase, he devoted several years to figuring out the best ways to avoid scams and negotiate the best car deals. He has written hundreds of articles on the subject of car buying and taught thousands of car shoppers how to get the best deals.