Do's and Don'ts of Auto Finance

Paying for Your New Car: The Do’s and Don’ts of Auto Financing

It’s a sad truth but auto loans can go wrong. When it happens, it’s often the result of a problem during contract preparation in the finance and insurance (F&I) office.

Car buyers need to know what typically goes wrong with auto financing and how these problems can be avoided.

Many consumers have a lot of information about the cars that they want to buy. The problem is that they don’t necessarily have the right information. The F&I element is absolutely crucial.

Typically, a dealer’s first basis for negotiation is ascertain your monthly payment. “So, about how much a month can you afford?” Or, “How much can you spend a month?” Once a dealer knows your payment ceiling, he can often pad a deal in rate. After all, a dealership is a for-profit entity.

To move through the F&I part of a deal, you can cut out the principle problem by going to the dealership with financing in hand. You can proceed as a "cash buyer" if you have the financing in place. When you are a “cash buyer”, all you need to negotiate is the total price of the car. When you’re negotiating for the price of the car only, salesmen are at a disadvantage because they can only really obscure the total cost of a vehicle if you are a "monthly payment" buyer.

You can get independent car financing from banks, credit unions, online lenders or independent leasing companies.

One of the big mistakes of prospective car buyers, most do not know their credit rating when they apply for an auto loan. Because credit is so important, it is crucial to make sure that your credit report is in the best shape possible before shopping for a car.

Another big mistake made by buyers involves the budget. Far too many people overlook their budget. You should set a sensible price range for the car you want to buy and stick with it. Monthly car payments and related expenses generally should not exceed about 20 percent of your monthly net income.

Research the current interest rates in the marketplace. Compare rates online. Look at leasing! Particularly if you are the kind of driver who gets a new car every 3-4 years.

Most consumers approach dealers without their financing organized. When they finally reach the finance department, they are worn out and in no position to stay on track, scrutinizing the details of the contract they are about to sign. It’s very common for people to agree to buy things they didn't plan to, simply because they are worn out.
To manage the sudden appearance of extra fees, question everything. Dealers are known to add extra fees.

The way to manage dealers and avoid financial mistakes is to be prepared. Do your research and be ready to stand your ground when the dealers come to you.

At AutoBidsOnline you can overcome a great deal of these issues. You can gather all of the information you need and submit a buy bid to our dealer network anonymously. Dealers are incented to accept your offer – quickly! Because if they do not, there is a good chance another dealer will.

Only when your buy bid has been accepted will a dealer know who you are. You can then stroll into the dealership, with financing already in place a get your new car – quickly, efficiently and cost effectively!