Car Finance Companies
Before you set out on your mission to buy a new car there are somethings about car financing and car finance companies that you need to understand. The first is that car dealers do not lend money. Car dealers are private businesses who sell cars for cash. To ensure that you the buyer can obtain the necessary financing to purchase a car from them the dealer is associated with a network of car finance companies who will lend you the money to buy the car from the car dealer.
Car Finance Companies
Some people mistakenly believe that it is better to go shopping for a car with cash as this makes the deal easier for the dealer and because of this the buyer will get a better deal. The reality is that the dealer gets a commission from the car finance companies in return for sending them your business. Taking this commission which the dealer gets from the car financing company into account there is more money on the table with a financed car purchase than with a straight cash purchase and because of this the dealer has more room to negotiate on the purchase price of the car with you.
Car Financing
As previously mentioned car dealers are not in the lending business. They do not lend any money to car buyers rather they have a list of car finance companies that they work with to provide car finance to their customers. Most new car dealers will use the car finance arm of the manufacturer whose cars they are selling. Remember that you don not have to use the car finance companies recommended by the car dealer. You are free to find financing yourself and to shop rates and terms.
Car Dealers
Remember that the car dealer will not lend you money and will not approve or decline the car finance application you make to the car finance companies they use to help sell their cars. The dealer will however screen your application, pull your credit and send your financial details and application to the lender that they feel will most likely approve your car finance application. Remember that if your application is declined not only will you not get your car but the dealer will not make a sale and the salesman will not get a commission. Everyone at the car dealer including the car finance companies they use wants your application to be approved just as much as you do.
