Car Finance Deals

Your "great new car deal" is not in the bag just yet.  Because unless you're paying cash, you have to finance the car (or finance the balance of what you didn't cover on your trade in or down payment).

Keep in mind that the finance person's job is to squeeze as much money out of your as possible, because the dealership makes the most profit per dollar off of "extras."  These extras will be pitched at you heavily AFTER you've agreed on the car's price with your salesman.  The finance office guy works on COMMISSION.

But before we go further, it's important to discuss whether or not you should pay cash for a new vehicle - if you can afford to:

Basically, it boils down to if you'd pay more money in interest over the loan of the car than you would get be investing that money elsewhere.  So if your credit is bad, the interest on the car loan would suck more money than otherwise.

TIP:  Do not disclose up front to the dealer that you are able to pay cash for the car!  If you do, some dealerships will put you into a different category (unbeknownst to you) of prospect, and go about making sure you pay more upfront for the car.

Five Car Financing Options

1. Dealership
Advantages - Convenience, speed
Disadvantages -  High pressure upsells, usually not a good deal, loans are often "front-loaded," meaning your payments are mostly interest at the beginning - designed this way so they still get more money even if you decide to pay it off early.