Should You Arrange Financing At The Dealership?

Financing your new lease or purchase at a dealership can be confusing. It can be difficult to understand in the moment, and you don’t want to agree to something that you don’t entirely understand.

Because of the hefty amount of verbiage involved with lease financing, let’s simply break it down piece by piece to understand it further. To start, if you don’t have cash to pay for a vehicle, financing for a lease is how you pay for the vehicle throughout the duration of the lease contract.

But should you finance your lease at the dealership, or should you arrange for an outside lender to finance your lease?

Pros of financing at the dealership is that it can be convenient, and sometimes quicker than doing it elsewhere. What’s more, dealers will often provide additional incentives if you go with their own finance arm – called a captive. However, cons include high pressure, and that loans are sometimes front loaded, meaning that payments are made up of more interest in the beginning of the loan than toward the end.

Before you arrive at the dealership, be prepared. Try to have a loan agreement already in mind. According to JD Power and Associates: “by doing so, the consumer has already determined what his or her credit rating is, has qualified for a loan at an acceptable interest rate, and knows what he or she can afford in terms of purchase price and a monthly payment. Having financing arranged in advance also encourages the dealer to come to the bargaining table with their best financing offer, saving both parties time and possible frustration.” This also includes searching for alternative financing options.

At the dealership, realize the correlation between the monthly payment and the interest rate. As mentioned in the cons, a car’s monthly payment can be low at the front end of the agreement, but it may have a higher interest rate. Also realize that the financial institution will give the dealer a small percentage of the interest charged for the loan, which means the dealer earns additional profit on the sale of the lease. Naturally, this means the salesman is also looking for a deal that benefits him as well.

With vehicles on, many leases skip the confusion on the front end and only need a monthly payment.  Because the vehicles on the online marketplace are currently in lease, other fees such as down payments are not required. Only a cheap, short-term monthly payment.

For more information on finding the best car lease deal or to learn how you can have a successful car lease trade, contact at 866-SWAPNOW.