Why You Should Secure Your Financing Before Car Shopping

By: Ray Paulsen

When a consumer enters a dealership, an experienced professional salesperson with a high closing ratio will have the buyer qualified inside of a few minutes and will know the direction to pursue to close the deal. One of the key questions will be, "Are you financing?" The smart consumer will answer " HAVE NOT DECIDED "

Answer the question in any of the following ways and the dealership is on it's way to a huge profit:

1 ) "YES, I WILL BE FINANCING!"- When shopping at a dealership and inquiring about available financing, you're considered a 'payment buyer' and you could end up with the short end of the stick. A dealer can, with some lenders, stretch the term to make monthly payments suit your budget.

2 ) "WHAT'S YOUR INTEREST RATE?"- You are telling the salesperson that the interest rate will come into play in your decision making. Some lenders will allow for a dealer to buy down the rate and if a point or two below average triggers your emotions, you are hooked.

3 ) "I AM PAYING CASH."- A dealer profits from the lender when you finance but when you are paying cash, there is no gain. I cant recall a week going by selling cars that a buyer would not make the statement, "Paying cash. What's your best price?" That question always put a smile on my face as I realized that I was dealing with someone who didn't have a clue about how to buy a car. During the negotiation process, if the deal is tight showing little or no profit, the dealership will be more likely to accept if you are financing and they will be realizing a profit from the lender.

The educated buyer will have a secured loan amount in place, be it from the bank, credit union or established line of credit, and goes shopping with that amount. However, you must still consider if there is a better deal to be had. Online shopping for rates is very competitive with some excellent offers. Shop only established lenders that you know. Capital One is an example of one of the leading providers of auto loans online.

Lenders will run a credit report and each inquiry will show on your credit report and the more inquiries on your report, the less likely the current lender will approve you, it's therefore wise to stay away from third party lenders and some dealers whom will submit your application to several lenders.

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