What You Should Know About a Car Buying Loan

When it comes to buying a car today whether it is for a new car or a used car most people need a car buying loan. There are still some people that pay cash for cars, but it is very rare unless it is a Hoopdy or Beater (under $ 3000). It seems that the majority of the car loans are provided by car dealers, they are not the lenders, but they are the ones that set up and do all the paperwork.

One of things you should know about a car buying loan that comes from the car dealer is that when you finance a car at the car dealership the financing is simply a product that the car dealer sells to you so they can make money. That’s right, the car dealership is merely an agent or middle man that sells you a car dealer loan. You know what happens when you have a middle man, they want to get paid. So when you buy a car with a car dealer loan it’s not really a car dealership loan, but another item that they sell. This product is provided by the actual auto loan lender.

A Brief Car Buying Loan History

Many years ago when cars were not so plentiful as they are today the car dealers and the manufacturers realized that they need to provide car buying loans if they were going to sell more cars. Early on they would make arrangements with banks to provide financing and then in the later years the car makers set up their own lending institutions to make car dealer loans for their buyers.

Back to today, we now have many different lenders that will provide you with a car buying loan. Most of them are banks, credit unions or lenders that are owned by the car manufacturers. The car dealer will make arrangements with many different lenders to finance the cars they sell and then they place or sell the car dealer loan to one of these lenders. They will choose a lender to sell the “Paper” or your car financing loan contract based on several different factors. First and foremost is the amount the car dealer gets paid to sell you an auto loan. Secondly they select a lender that will accept your contract (car finance agreement) based on your credit. With all things being equal, they naturally select the lender that is the most lenient and pays them the most for being the middle man.

Low Rate Financing and Car Buying Loans

You might wonder about those specials on new cars that you hear about that have 0% financing or very low interest rates. This type of car buy loan is financed by the car maker’s lending division and is supplemented by the manufacturer. For example; when an auto maker has a car dealer financing special that has 0% car dealer loans they also have a rebate for the car buyer that does not use the financing. If they advertise a 0% for 60 months special then they also have a $1000 instant rebate. The $1000 is roughly the amount that it would cost the lender to provide you with a car buying loan versus a standard rate loan, providing you have good credit.

Which is the Best Loan for Buying a Car?

There are many variables that come into play when you ask that question. Everyone is different and has different financial situations. So the best auto buying loan is the one that works for you and needs your needs. Before I buy a car I always go to ….Click Here NOW!… and get a quote before I go to the car dealer and get a car buying loan. That way I always have several lenders competing for my business, which always provides me with a selection of different loans and then I can pick the best one for me. I can then compare those to any car dealer loan that they may offer. If I don’t choose a loan from the dealer I then get to deduct the rebate (when applicable) and avoid the extra expense that the middle man gets paid. Check it out and get the best car buy loan by Clicking Here! Bad credit can buy a car too get approved and save time.

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