Can someone explain car financing?

Question

Problem: I want to buy a car, but I don't have the money to pay for it up front. Now I understand I have to get a loan; what I don't understand are the details.

Let's say I get a loan from the dealer. In that case I want to make a large down payment, which is well over my credit card limit. Now my question is, how do I actually transfer that money? I'd think cashier's check, but I don't know how much it is or who I'm paying it to until I negotiate the deal. So what do I do? Is there any way I can arrange it without having to go back and forth between the bank and the dealer?

If I get the loan from an external source, same issues: How do I know how much I need? Do I get the loan first or do the negotiation first? And afterwards how do I transfer the money to the dealer?

Any wisdom you can provide is much appreciated.

Clarification: I guess I shouldn't have mentioned the credit card, that was misleading. What I meant was, it would be nice to pay by credit since it's instantaneous and exact, but since my credit limit is too low that's not really an option and I need another way.

Thanks for all the replies so far, they've all been helpful and I regret that I can only pick one best answer.

Answer 1

Go to the bank first and they will approve you 'up to a certain amount" This means that if they approve you for up to $10,000 and you end up only needing $8000 then that's fine , just hand over a cheque for 8000 when you pick up the car and that is all you have to pay back to the bank. Some dealers have special financing, but some times you pay extra for the car with special low financing. If you borrow through the dealer, they are use to this and will guide you through the process. Just bear in mind that they are there to make it convenient to separate you and your money (or future money)

Answer 2

If you get approved for a loan from a bank, or other lender, they often give you a blank check that you complete once you negotiate your price.

Here are few other tips:
When you get to the dealer, dont tell them up front that you have financing. Negotiate the best price, then tell them you have your own financing, and give the dealer a chance to beat (not match) the deal you got.

Also, be careful not to overextend. You need to use caution if you are using your credit card to pay the down payment on your car loan. You may want to consider a cheaper, or used car for starters, then upgrade to something better when your finances improve some (just a thought...)

Answer 3

Talk to your bank, or better yet a credit union if you are a member. Tell them you want to be preapproved. They'll ask you all the questions like new or used, how much the car is, what your down payment will be, etc. Ask them if you can finance with 0 down.

You really don't want to use a credit card as your down payment unless you are getting a great fixed rate like 4.9% or lower for the life of the loan. If so, just call the credit card company and ask them to send you a check so you can deposit it into your account. Then just write your own check to the dealership.

If your bank or credit union won't pre-approve you, then make sure whatever financing deal you work out at the dealership is worked out BEFORE you buy the car.

In the past, my car purchases went this way. I pre-approved a loan from my credit union. I bought the car. I wrote the dealer a check for down payment from my personal checking. Then I went to credit union with paperwork from car purchase. They cut a check to dealer. I hand delivered the check to dealer. All done.

Answer 4

the dearler will arrange all that for u. if u are buying the car.... u are basically PAYING him/her (his commission). make them earn it!

just plain tell them exactly what u want to do. "i need u to finance me", "i have a down payment", "i will use my credit card for downpayment", "i will bring you a cashier's check"

but the basics of how it works is the dealer has an in-house lender that will be able to lend to u. if not, u can shop around for loans. but they can do it there. then u can also refinance it later especially if u have a credit union or goood bank.

as far as if u use an outside lender, its the same as the in-house lender u just don't know some of the details, cuz the dearler does some stuff for u.
the outside lender will want to either know the exact amount of the loan and give u the exact amount of financing.
or u ask for a particular amount (less down payment, or just above total cost), and they deposit it into your account, then u get your cashier's check.

easy. as far as how much? well u have to have a contract (or written price) to know the exact cost, thats more if u go to outside lender. they will want to see that.

the inhouse lender is on the same team as the dealer. so if the dealer says...."what if i could get u a deal and get the price to.....$xxxxx.xx (lets say 18,000.00)..."... and u say YES... well he will write it up for 18k but then add all the taxes, transfer fees, options, etc and give u final price of 21,846.00.

so just make sure u know the exact price.
u can also say what u want the max price to be after everything. so if u say "I like the car.... but only if i have to spend 18k total, out the door" or whatever phrase u wanna use.