CHARLOTTE, N.C.,None — Consumers spend hours searching online and on dealers' lots looking for just the right car, but many don't do the same when it comes to getting the loan.
"If I bought one now, I'd probably let the dealership do the financing," said one man.
The single biggest mistake people make when buying a car is to not arrange outside financing before they walk onto the dealer's lot. If a person is prequalified elsewhere, he can compare that to what dealers like Amin Mehrizi are offering.
"I can get anywhere from 3.2 (percent) if you have excellent credit on cars newer than 2006 all the way up to 25.99 percent," he said.
But, if a car buyer does not have excellent credit, they can forget about the low-rate financing. Consumer experts said that's where the dealer can make a big profit. They borrow the money at 4 percent wholesale, but write the buyer the loan at 7 percent or higher.
"I feel they're more out for a profit," said Jenny Lemmon.
Lemmon said she did not want a dealer making a profit on her loan, so she used a credit union, where rates can be one to three percent lower than other lenders.
Experts also advise buyers to check online for competitive rates, as well as with traditional banks and the buyer's auto insurance company.
Experts also said to avoid financing a car for longer than 42 months. Anything longer and the buyer risks owing more on the car than it's worth.
WSOC
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