If you are planning to purchase a new vehicle, you might have read dozens of articles about it and you might have also noticed that the said articles emphasized similar points. By now, you are probably aware that there are a lot of considerations to make in buying new car and often most car buyers do not have enough money to buy the car they are interested in and usually go for vehicle finance. You must be aware that the buying process of a car puts you in high risk of getting bad loan. In order to avoid this, car buyers must do their homework and conduct little research in order to be familiar with the entire financing process and avoid getting an upside-down loan deal. Here, we will discuss why availing vehicle loan offered by your car dealer is not really a good option.

Nowadays, most car dealers also offer finance assistance to their clients and some clients often avail such finance offer since they won\’t have to go to other loan firms to apply for car loans which makes it convenient. However, what most car buyers do not know is the fact that availing finance assistance offered by car dealers can make them pay more than they can get from other loan firms. According to a research done by the Center of Responsible Lending, the car loan rates offered by car dealers have been marked up by 2.47% or an amount of $714 is added to the loan. From the data gathered for the research, it was found out that big markups are often offered to used-car loans which have an average percentage increase of 2.9 while loans for new cars have an average mark up of 1.01%. Moreover, people with bad credit history, long term loans and loans involving small amount get higher markups.

Basically, most car buyers are unaware that car dealers usually increase the rates of the lender and usually end up paying big amount of money. Based on the study mentioned earlier which analyzed 1.7 million accounts of car loans from 25 car finance companies, the markups made by the dealers can cost the buyers to pay $2.5 billion after their loan period.

In order to avoid upside down loan or paying more than what you get , never settle with a loan deal without comparing the loan rates offered by other lending firms. Visit local banks, online lenders and other credit institutions which can offer a better deal.

If your car dealer happens to offer you finance assistance when you shop for a car, try to make negotiations with the rate. However, this move is highly discouraged by consumer advocates in order to avoid the illegal financing practice like yo-yo financing. In yo-yo financing, car dealers quote low loan rate that is subject for approval. After some time, the dealer will then notify the customer that the loan was denied and the customer must either return the vehicle or agree to the high loan rate offered. This is the reason why consumer groups discourage customers to go for loans offered by car dealers.

Avoid being a victim of bad loan deals or upside-loan deals by allotting some of your time and putting some effort in searching for a lending institution that offers good loan deals that fits your capacity to pay. Never sacrifice your money for convenience.

Author Bio: William Piker Camrose Auto Dealers New Premium Used Trucks Vans Cars Camrose Alberta Fill out a confidential credit app on-line Auto Dealers in Edmonton Net Auto Dealers in Whiterock Canada