The primary benefit of going directly to your bank or credit union is that you will likely receive lower interest rates. Dealers tend to have higher interest rates, so financing through a bank or credit union can offer much more competitive rates.
How do you buy a car with an existing loan?
You essentially have two options:
- Go with the seller to his lender and pay off the loan (to ensure he doesn’t run off with the money)
- Have a dealer act as a broker. The dealer will buy the car from the seller and resell it to you. You’ll pay a little extra to make sure everything goes smoothly.
Can I finance my own car?
As long as your vehicle is less than 10-years-old, has less than 100,000 miles, and is in good condition overall, you can get a car loan on a car you already own. Many people do this, especially when they’re getting a higher return on their savings or investments compared to an auto loan rate.
Can I bring my own credit report to a dealership?
“You can bring a copy of your credit report, but it won’t do you any good. Every lender is going to run your credit to ensure it’s up to date and has no modifications. It’s good to be prepared when you go to the dealer. Don’t forget to bring the other documents they may ask for, like proof of income.
Is it better to finance a car through your own bank? – Related Questions
What is a decent credit score to buy a car?
What Is the Minimum Score Needed to Buy a Car? In general, lenders look for borrowers in the prime range or better, so you will need a score of 661 or higher to qualify for most conventional car loans.
Which credit score do car dealerships look at?
Auto dealerships use the FICO credit bureau, which stands for Fair Isaac Corporation. They also use the FICO Auto Credit Score, which has a range of 250 to 900. This may mean that an auto dealer has a different credit score for you than the one you see on your personal credit report.
How many times can a dealership pull your credit?
When a consumer seeks financing through an auto dealership, the financing may be done by the dealership itself or by a third-party lender. If the dealership is, itself, the lender, a credit application permits the dealership to pull a consumer’s credit one time.
How many points come off credit score for inquiries?
Credit inquiries are only responsible for 10% of your credit score while your payment history makes up 35% of your score. For most people, according to FICO, a new hard credit inquiry will only drop your credit score between one and five points.
How do I remove hard inquiries from my car dealership?
If you find an unauthorized or inaccurate hard inquiry, you can file a dispute letter and request that the bureau remove it from your report. The consumer credit bureaus must investigate dispute requests unless they determine your dispute is frivolous.
Why do car dealerships want you to finance through them?
“Car dealerships want you to finance through them for two main reasons: They can make money off the interest of a car loan you get through them. They may get a bit of a kickback if they’re the middleman between you and another lender (commission).
What should you not say to a car salesman?
5 Things to Never Tell a Car Salesman If You Want the Best Deal
- ‘I love this car. ‘
- ‘I’m a doctor at University Hospital. ‘
- ‘I’m looking for monthly payments of no more than $300. ‘
- ‘How much will I get for my trade-in? ‘
- ‘I’ll be paying with cash,’ or ‘I’ve already secured financing. ‘
Do dealerships like big down payments?
“It’s actually a split, but in most cases, dealers will gladly take your money. Without getting into the jargon behind it, the time value of money states that money in hand now is worth more than in the future due to inflation. Therefore, a big down payment will usually cause a salesman’s eyes to light up.
What APR is good for a car loan?
The average auto loan interest rate is 4.33% for new cars and 8.62% for used cars, according to Experian’s State of the Automotive Finance Market report for the second quarter of 2022. With a credit score above 780, you’ll have the best shot to get a rate below 3% for new cars.
What is considered a high car payment?
According to experts, a car payment is too high if the car payment is more than 30% of your total income. Remember, the car payment isn’t your only car expense! Make sure to consider fuel and maintenance expenses. Make sure your car payment does not exceed 15%-20% of your total income.
What is a good interest rate for a 72 month car loan?
The average 72-month auto loan rate is almost 0.3% higher than the typical 36-month loan’s interest rate for new cars.
Loans under 60 months have lower interest rates for new cars.
| Loan term |
Average interest rate |
| 60-month used car loan |
4.17% APR |
| 72-month used car loan |
4.07% APR |
What APR is too high?
Since APR represents interest and added fees, you will want the smallest APR possible. If you have good credit (say, between 700-749), an ideal APR is around 5%. If you have bad credit (say, less than 650), your APR could climb to 16% or 20%. The higher the APR, the more likely you are to fall into debt.