Should I apply for a car loan before going to a dealer?
Arranging car finance can be tricky. Ideally, you want low interest rates and affordable repayments. Many Australians go with dealer-arranged finance. But, did you know you can apply for a car loan before going to a dealer? Dealer finance has its advantages and so does a pre-approved car loan organised through a broker. So which is the better option?
The pros and cons of dealer finance
Dealerships prefer to finance a car with one of their lenders, so they can collect a commission. While it does place them at an advantage, there may be some benefits for you too.
Choose your car, submit all the required documents, and the dealer applies for a car loan on your behalf. Easy.2. They’ll push to make it happen
The salesperson wants to snag their commission, so he or she is going to push to get the car financed. Dealers have relationships with lenders, so even if you have a bad credit score, they may be able to swing the odds in your favour.
Sounds good, right? But, there are a few disadvantages to be aware of.
If you’re a rookie when it comes to car finance, the dealer will pick up on it. They may sway you towards a particular lender, a longer loan term or higher interest rates that mean more money in their pocket and less in yours.2. Interest rates may be higher
As a business, naturally a dealership wants to increase its profits. One way they may do this is by selling you a loan with a higher interest rate.
Is getting a pre-approved car loan through a broker a better option?
It can be. Here are the benefits of applying for a loan through a broker, before heading to the dealer:1. A broker will do the heavy lifting for you
If you apply for a car loan through a broker like National Loans, the broker will help you compare loan options, provide expert recommendations and submit the application on your behalf.2. You’ll know how much you qualify for
You might already have an idea of how much you can afford to borrow. But if you get a pre-approval through a broker before you start car shopping, you’ll know exactly what price range to search in.3. More negotiation power
One of the biggest advantages of getting a pre-approved car loan through a broker is walking into the dealership with more negotiating power. If you’ve got your finance in place, salespeople will know you’re serious and may offer you a better deal.
Should you apply for a car loan before going to a dealer?
Letting the dealer arrange car finance is convenient but you may not get the best deal. Applying for a car loan through a broker means you’ll get the best car loan for your situation and will have more negotiating power when you visit the dealer.
Ultimately, whether you choose dealer finance or a broker car loan, always compare quotes. National Loans can help you find the best car loan rates in Australia*. Get a free online quote or apply for a car loan and receive an answer in minutes!