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Wife is looking to get into a new car. Unsure yet which car but she appears to have her heart set on a Jeep Renegade. I recently bought a car the traditional way, meaning I went to the dealership and spent hours there while financing was sought and approved. She wants to do something different and have financing pre arranged before she even steps foot at a dealership. The thing is that neither one of us has ever done pre arranged financing before so we wanted to now how it works.
I know when you do it the old school way like I did the dealership tells the bank exactly how much of a loan I need for the vehicle which includes taxes and registration. If you go get a car loan yourself, how do they know how much to loan you to cover all the fees?
You tell the bank roughly how much you want to borrow. Then you go to the dealer, arrange a price for the car. Go back to the bank, get a check for the price of the vehicle, then take it back to the dealer.
Most banks or credit unions allow you to pre-apply for the loan. They'll tell you the rate and how much they are willing to finance. The dealerships will pressure you to finance with them, so having the pre-approval will give you leverage. Honestly, I've done both. I've gotten the approval from my credit union and financed through them but I've also financed through the dealer when they could get me a much better deal.
Most banks or credit unions allow you to pre-apply for the loan. They'll tell you the rate and how much they are willing to finance. The dealerships will pressure you to finance with them, so having the pre-approval will give you leverage. Honestly, I've done both. I've gotten the approval from my credit union and financed through them but I've also financed through the dealer when they could get me a much better deal.
Honestly in the current environment I don't see much reason to go with outside financing. Almost all of the OEM's are offering 0% financing on many of their vehicles. Even where they are not the rates are very low.
With our credit union, they basically give you a check that can be written up to an amount of $X and be used at any licensed auto dealer in Florida. Dealer's finance department knows what to do with it from there.
We've had some problems with identity theft in the past, and in the clean-up the spousal unit managed to screw up freezing his credit with one of the bureaus so that it's a massive pain to unfreeze. Easier to just use the credit union as lender where we have an existing relationship (they can do credit pulls despite the freeze because of that) and who offers very competitive rates than to have to untangle the Transunion mess in case that's who the dealer uses to verify credit.
The Jeep Renegade is nothing more than a rebadged Fiat 500X. And you know what Fiat stands for. You'll be on a first name basis with Tony before you know it.
Normally I would get my financing in place before I go to the dealer. But my special order Jeep came in ahead of schedule while I was out in the field with my Jeep group. Because it was late in the day, I went straight to the Jeep dealer without having my financing in place. The finance guy wanted to set me up with a 2.5 percent loan. So I used my smart phone app to get a loan set up with one of my banks while I'm sitting on his office. As he's sitting there trying to get me to go with 2.5 percent I'm telling him it will be just a few minutes and I'll have my own financing in place. So he gets back on his computer and says he found a deal for 1.79 percent. Imagine that! My bank was offering 2.0 percent, so I took the 1.79 percent. Best of all, I already had a credit card with that bank, so making monthly payments is easy.
To have the upper hand get all your ducks in a row before going to the dealer. That means line up your pre-approved financing through your own private financial institute before driving onto the dealers lot. And I would check comparable vehicle pricing from other dealers too.
With my bank I basically get an approval up to a certain amount(usually far more than I actually want to spend). Then I can just use their mobile app to complete it. Which involves simply printing out a dealer instruction sheet where I sign on the amount and it has them fax the purchase agreement and title to the bank.
In the past I've also used credit unions that mailed me a blank check to fill in the amount.
I do let the dealer finance guy attempt to beat the rate but if he's just going to match I stick with my bank/cu.
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