5 Myths About Auto Financing: How Dealerships Can Help Unlock The Process

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When it comes to purchasing a vehicle, auto financing can often seem like a maze full of complex terms, rates, and confusing decisions.

Unfortunately, there are many myths floating around that can make the process seem even more daunting.

Car dealerships can actually be a great resource to navigate this process, and they can help clear up the confusion.

Let’s tackle five common myths about auto financing and show you why visiting your local dealership might be the key to securing your next car.

In This Post

Myth 1: You Need a Large Down Payment
Myth 2: Used Cars Cost More if You’re Financing
Myth 3: Once You Have A Car Loan, You’re Stuck With It
Myth 4: You Can’t Get Approved for a Car Loan with Bad Credit
Myth 5: You Can’t Get Approved for a Car Loan if You’ve Already Been Turned Down
Conclusion – 5 Myths About Auto Financing: How Dealerships Can Help Unlock The Process
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Myth 1: You Need a Large Down Payment

While it’s true that a larger down payment can sometimes help reduce monthly payments and interest rates, it’s not always required.

Many dealerships offer financing programs that cater to a wide variety of customers, and some will approve loans with little to no down payment. Many offer trade-in options, allowing you to use your current vehicle as a down payment, reducing your upfront costs.

In many cases, dealerships have access to in-house financing or work with lenders who specialize in offering loans with flexible down payment terms, making it possible to get into a car with less money upfront than you might think.

Myth 2: Used Cars Cost More if You’re Financing

Many people believe that financing a used car will cost more than buying one outright. The truth is, the total cost of a used car can actually be less when financed.

Dealerships often work with a variety of lenders and can help you find affordable financing options, which could spread your payments out over time while keeping monthly costs low.

Plus, when you finance through a dealership, they may offer special promotions such as low-interest rates or even deferred payments, making it more affordable than you think.

Financing options for used cars can be quite competitive, and your dealership will help you secure a deal that fits within your budget.

Myth 3: Once You Have A Car Loan, You’re Stuck With It

One of the most prevalent myths about car financing is the belief that once you sign a loan agreement, you’re stuck with it forever.

In reality, many car dealerships offer options for refinancing your loan if your circumstances change, such as a drop in interest rates or an improvement in your credit score.

Refinancing can help lower your monthly payments or even shorten the length of the loan, saving you money in the long run.

Car dealerships have the connections to work with multiple lenders, which means you can often find a better deal than what you initially received.

You don’t have to feel trapped by your loan – dealerships can guide you through options to modify your payment terms if needed.

Here’s the table showing how much you could save each month with interest rates ranging from 4% to 9% on a $20,000 auto loan over a 5-year (60-month) term.

Interest Rate	Monthly Payment	Total Interest Paid	Total Loan Paid	Savings (vs. 9% Interest Rate)
9%	$406.71	$4,402.50	$24,402.50	–
8%	$388.88	$3,528.90	$23,528.90	$17.83
7%	$371.46	$2,850.60	$22,850.60	$35.24
6%	$354.41	$2,250.60	$22,250.60	$52.74
5%	$337.74	$1,757.40	$21,757.40	$68.97
4%	$321.41	$1,270.40	$21,270.40	$85.30

Myth 4: You Can’t Get Approved for a Car Loan with Bad Credit

A common misconception is that bad credit means you won’t be able to secure a car loan.

The truth is, dealerships work with individuals with all types of credit scores, including those who are rebuilding their credit.

Many dealerships have partnerships with subprime lenders who specialize in approving loans for buyers with less-than-perfect credit histories.

These lenders understand that people go through financial hardships and are more willing to work with you to find a loan that fits your situation.

Whether you’re looking for a new or used car, car dealerships are often your best option for getting approved, even if your credit isn’t stellar.

Myth 5: You Can’t Get Approved for a Car Loan if You’ve Already Been Turned Down

Have you applied for a car loan at one dealership and been turned down? That doesn’t mean it’s the end of the road for you.

Many customers experience rejection from one lender, only to be approved by another. Car dealerships often have a variety of financing options available, including multiple lenders with different approval criteria.

What might not have worked with one lender could be a perfect fit with another. In fact, dealerships often help buyers who’ve been turned down by other institutions by leveraging their network of lenders and offering tailored loan packages that increase your chances of approval.

Conclusion – 5 Myths About Auto Financing: How Dealerships Can Help Unlock The Process

Car dealerships are not just places where you pick out your next car; they’re also your best partners in securing the financing that works for you.

Whether you’re concerned about a down payment, dealing with a less-than-ideal credit score, or worried about being stuck with your current loan, a dealership has the tools and resources to help.

With access to multiple lenders, a variety of financing options, and the expertise to guide you through the process, dealerships offer more flexibility and support than you might think.

By understanding the truth behind these five myths, you can confidently move forward in your car buying journey, knowing that most dealerships are there to support you every step of the way.