[Lucid]

Originally Posted by stovt001

Yup, a few benefits to taking care of financing ahead of time:

1) As you said, you already are approved, so you know exactly what you can afford and nothing can fall through.

2) Sometimes your financial institution (especially credit unions) will offer lower rates than the dealer's lender.

3) And this is the big one: having financing ahead of time makes negotiation so much more straightforward. Salespersons and the finance people will often try to disguise higher prices through creative financing offers. They'll try to negotiate using monthly payments so they can extend the term and get more money while making you think you're paying less. The dealers will try to negotiate trade-in, financing terms, vehicle price, and back-end add ons all at once, making it nearly impossible to detect where all the money is going or what you'll really end up paying. By getting financing ahead of time, you just removed one step from the process.

So then you first negotiate vehicle price. Get the price you want, not just whatever you can afford. Then negotiate add-ons (hint: most aren't worth the cost. Dealers make most of their new car sales profits on the back end of the deal.) With that, get one final walking out the door price. After that is set in stone, negotiate the trade in. Use the trade-in money to contribute to the down payment, put in whatever other down-payment money you have, then cover the rest with the financing you already have. Everything transparent, organized, and under your control. Much easier to get the price you want this way.

So how does that work? Do I just go down to my bank and say "I want to finance a car" and then they tell me how much they'll approve me for?