How To Buy A Car At The Dealership WITHOUT Dealer Financing

By Amy Beardsley

Expert contributor for Credit Knocks

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Summary: Can you buy a car without dealer financing? Yes! Find out how to get preapproved for an auto loan before you head to the dealership.

Have you ever gotten a raw deal from a car salesperson? If you haven’t, you’ve probably heard at least one story about someone who has.

Keep in mind that not all car dealers are bad. You might have had an excellent experience!

But here’s the thing:

When it comes to financing a car, there’s something you need to know: you don’t have to get dealer financing to buy a car.

It’s true!

Plenty of banks, credit unions, and lenders offer auto loans.

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Get Better Rates With A Higher Credit Score!

In a recent study at Credit Knocks, we found that *48% of clients who used a credit repair company got a credit score increase of 100+ points.

Consultation is quick, easy, and free.

If you get preapproved for a loan, you have more negotiating power at the dealership.

Want to know how to buy a car at the dealership without dealer financing?

Keep reading.

First Things First: Check Your Credit

Your credit score is a major player when applying for a loan. Before you look for a lender, review your credit score to see where you stand.

Higher credit scores can lead to lower interest rates.

And lower interest rates can save you a significant amount of money over the life of the loan.

But remember:

No one is perfect.

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Even the most responsible borrowers can miss a due date now and then. Late payments can hurt your credit, and it’s better to discover potential problems now.

If your score is lower than you thought, review your credit report to see if you can find the problem and fix your credit.

If you’re ready to move ahead with your car loan, here’s what to do.

3 Easy Steps To Buy A Car At The Dealership WITHOUT Dealer Financing

Step 1: Apply for Auto Loans from Multiple Lenders

The trick to getting a great rate is to apply for auto loans from multiple lenders.

Several options are available, such as:

  • Large national banks
  • Local community banks
  • Local credit unions
  • Online lenders

If you’re not sure where to start, check with your own bank or credit union first. You might get a lower interest rate for being a customer.

From there, move on to large national banks and online lenders to compare rates and terms.

Here we'll add a notable quote or an interesting statistic everyone will be interest in.

But won’t applying through multiple banks ding my credit score?

The good news is it won’t affect your credit score.

Here’s why:

At this stage, lenders are doing a soft credit check. You might see soft inquiries when checking your credit report, but it won’t affect your credit rating.

Step 2: Pick a Lender and Get Preapproved

Now that you have several offers in-hand, it’s time to narrow down your choices and pick a lender.

When comparing lenders, there are four things to consider:

  • Annual percentage rate (APR): The APR is the interest rate lenders charge to let you borrow the money.
  • Loan term: How long you have to pay back the loan is the loan term. The longer the term, the more interest you’ll pay.
  • Down payment: The more you can put down, the lower your payments might be. Higher down payments can also qualify you for lower interest rates, saving you more money.
  • Taxes and fees: The price of the car goes beyond the sticker in the window. You might also pay state sales tax, documentation or processing fees, and other additional costs.

Now, this next part is important:

Until now, lenders have done a soft credit pull. To get preapproved for an auto loan, a lender will need to do a hard credit pull.

Quick Tip:

Get pre-approved for a auto loan online before you go shopping for your new car. 

And a hard pull will show up on your credit report.

But there’s a little-known secret:

Multiple hard inquiries can count as just one inquiry if done within a short time frame.

When you’re ready to apply, the lender will ask for additional personal details, including your Social Security number, income information, and debt balances to finalize your loan offer.

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Increase Your Credit by 100+ Points

In a recent study at Credit Knocks, we found that *48% of clients who used a credit repair company got a credit score increase of 100+ points.

Consultation is quick, easy, and free.

Once the bank hands you the preapproval letter, there’s just one thing left to do:

Find your perfect car!

Step 3: Find Your Car

This is the part you’ve been waiting for. Take your preapproval letter and head to the dealership.

Read through your loan offer to make sure you don’t have any restrictions. For instance, some lenders might exclude specific car manufacturers or types of cars or only give you 30 days to use the loan.

Quick Note:

Car dealerships make most of their profit off of their auto loan financing. 

And when you find the right car?

You have a lot less to worry about because you already know what your monthly payment will be.

Because you took control of your finances and got preapproved, you don’t have to discuss loan terms. Instead, you have more negotiating power and can focus on getting the dealership to cut you a deal on the price of the car.

Just remember to review the purchase contract before you sign it.

You don’t want to get stuck with hidden fees or add-ons you didn’t ask for.

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Drive Home Your New Car

Getting preapproved for an auto loan before you visit a dealership can reduce the stress of buying a car. Imagine taking your time to compare a loan’s rates and terms instead of feeling pressured into a decision at the dealership.

Whether you’re buying new or used, take the time to get preapproved  You can save a significant amount of money and have more negotiating power when you don’t rely on dealer financing.

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