Is getting a loan through the dealer the best way to finance a car?
The answer is ... sometimes. A little preparation will serve you well, though. If all you do is ask the dealer to arrange financing for you, you're not likely to get a great interest rate on your loan. But if you shop around, you'll be surprised at the range of rates available to you. Your bank, credit union, or other local banks can offer loans, as can some car insurance providers. Your local American Automobile Association (AAA) office may be able to help you out, too. And, of course, online is perhaps the easiest place to comparison-shop. Drop by Bankrate.com (NASDAQ:RATE) for a list of the best available rates.
Once you have a good rate, you might take it to your dealer and see if he can beat it. He'll often be willing to do so. When I was buying a car, I found a great loan rate offered online and went ahead and got the paperwork for it. Assuming I'd use that loan, I took the paperwork in to the dealer when I was buying the car. The dealer looked it over and came back to me with a slightly better interest rate, so I ended up taking that better deal. Soon after, when I was at my insurance agent's office, making sure my new car was covered, she was ready with an even lower interest rate for my loan. Don't assume that your options are limited -- they're not!
For much more scoop on the ins and outs of the car-buying process, check out the Fool's How to Buy a Car area and ask any questions on our Buying and Maintaining a Car discussion board. Our Insurance Center can also be of use.
For lots of tips on how to get your life in order, financially and otherwise, including how to lop off several hundred dollars from your monthly or yearly expenses, try our Motley Fool Green Light newsletter service.
Bankrate is a Rule Breakers recommendation.
Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.
