When buying a vehicle in the Palmetto State, securing car financing from a dealer may be convenient but not ideal. For many reasons, you’re better off shopping around for auto loans in Lexington, SC, and other nearby counties with outside lenders, like credit unions like palmettocitizens.org.
Here are the most significant benefits of working directly with an outsider auto loan lender:
Avoiding Dealer Markups
Car dealers are middlemen that make extra profits from credit transactions by adding certain percentages to the interest rates of lenders. The markup may seem negligible, but it could cost you thousands of dollars over the life of your loan.
As for-profit businesses, the goal of auto dealerships isn’t to help save you money. Rather, they want to make as many sales as possible and make the most money from every deal. When a dealer offers you something, it’s not necessarily the lowest interest rate you can qualify for. It’s simply the most profitable deal for it.
Minimizing Hard Inquiries
Many auto dealers work with different banks and other financing companies. When you apply for a car loan through a dealership, there’s no telling how many inquiries it’s going to make on your credit score. Since hard inquiries are detrimental to your credit rating, working with a dealer might affect your creditworthiness for a while.
Protecting Yourself from Scams
While many dealers observe integrity, some are out there to rip car buyers off. Certain dealerships put add-ons you didn’t know about, which could increase your monthly payment by tens of dollars. Others might lie about your credit score, and disqualify you for competitive interest rates just to make more profits.
Skip the middle person, and obtain financing directly from the lender to have more control of the deal. Get pre-approved for an auto loan to lock in a favorable rate for a certain period before visit a dealer’s lot.