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Car Buyers And Auto Loans

By Bruce Jackson

The moment you walk into a dealership to buy a car, the car salesman will ask you how you plan to purchase this car. If you are like most car buyers, you will respond back by saying that you will be financing the new or used car. Next, the salesman will attempt to convice you that applying for a car loan through them is the best option. However, not many car buyers are able to pay off their auto loans in a short amount of time, therefore, the dealers rely on the car financing that is processed through them. Hence, the dealer will get a higher profit because of the loan that you applied for and the car purchase margin. When you take out new auto loans through your dealership, they are making more money with the loan and the car price.

These days, banks and credit unions are more strict in approving auto loans because of the credit crunch and the state of the current economy. Unfortunately, if your credit history and credit profile is not at least average, then it might be difficult for you to apply for an auto loan. However, there are some alternatives besides banks and credit unions, and also you should consider improving your credit history and profile, because that will still improve your overall financial situation.

A important issue with new auto loans is that as soon as you drive the car off the lot, the vehicle starts to become a depreciating asset. Therefore, the car’s value begins to decline and it is not a solid collateral, like a residential home. The financial institution is placing confidence in that you will be able to loan balance in full and by the loan maturation date. This means those with low credit scores are considered a higher chance to lenders, and therefore may be denied a loan.

An choice to banks and car dealerships when it comes to auto financing, is the Internet. Many online companies exist that offer auto financing alternatives, and they also act and provide services like a financial bank or lender. An advantage of applying online and getting approved before you go to the dealership is you can walk into the dealership as a cash buyer since you have been approved already. As a result, you will have more freedom and flexibility in your purchasing options and you will not have to deal with the haggles of the financing process at the dealership.

Before you go into the dealership, equip yourself with this information and you will be prepared the next time you buy a car. It is always a good idea to know how the dealers work and what you can expect in your next auto loan application process.

Want to find out more about auto loans, then visit on how to choose the best car financing for your needs.

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Article Citation
MLA Style Citation:
Jackson, Bruce "Car Buyers And Auto Loans." Car Buyers And Auto Loans. 17 Aug. 2010. 3 Aug 2014 <>.

APA Style Citation:
Jackson, B (2010, August 17). Car Buyers And Auto Loans. Retrieved August 3, 2014, from

Chicago Style Citation:
Jackson, Bruce "Car Buyers And Auto Loans"

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