The Auto Financing Road Trip
Before visiting the dealership:
- Based on your needs and budget, determine a realistic price range for the auto you are thinking of buying.
- Know the difference between buying and leasing an auto.
- Know your credit record and that it may affect the finance rate you are able to secure.
- Compare annual percentage rates and financing terms from multiple sources such as banks, finance companies, and credit unions.
When shopping for an auto at the dealership:
- Stay within the price range you can afford.
- Negotiate your finance arrangements and terms.
- Understand the value and price of optional products such as extended service contracts, credit insurance, or guaranteed auto protection. If you don’t want these products, don’t sign for them.
- Read the contract carefully before you sign it.
After completing the auto purchase or lease:
- Make your payments on time. Late or missed payments incur late fees and appear on your credit report, which can impact your ability to get credit in the future.
- If you financed the auto, be aware that the dealership (or a bank, finance company or credit union that purchases the contract from the dealership) holds a lien on the auto title (and in some cases the actual title) until you have paid the contract in full.
- The dealership may retain your finance contract, but usually sells it to a third party, such as a bank, finance company or credit union, at a wholesale rate (often called the "buy rate"). The bank, finance company or credit union that buys your contract will service the account and collect payments.