Although getting in-house financing from your car dealer might seem easy and quick, it does come with its own set of disadvantages.

Some of the cons of using in-house financing from your car dealers are:

• All bundled into one transaction
  At a glance, having the entire car-buying process all bundled up into one transaction might make purchasing seem easy. However, you need to keep in mind that it is a horrible way to buy a car, especially if you are looking to get a good deal. The price, down payment, trade in, and auto loan terms are all put into one transaction. This is a common dealer trick to make you focus solely on the monthly payment of the car, while other expenses such as trade-in value, vehicle price, and car loan terms are ignored. This makes you believe that it is a good deal, but, in fact, has many loopholes. It can also be confusing when everything gets bundled up into one package. This is, however, beneficial to the dealer as he/she are aware of the consequences. They usually target inexperienced customers by jumbling the numbers.
• Car dealers charge a markup
  This is yet another business model. Since they want to make money, the car dealer ends up making a tidy profit on the sale by marking up the cost of the car loans that they offer. In most states, there is no legal obligation to disclose the amount of markup or compensation that they receive when procuring a loan.
• The car dealer gets the better deal
  The dealers have a built-in incentive that they get when they refer you for a car loan. The deal that they offer you is actually more profitable for them than it is for you. The incentive completely depends and varies on the dealership and the company.
• Car dealers encourage you to get in over your head
  A car dealer’s job is not to watch out for your financial well being, but to get you to buy a new or a used car. You need to be very careful as some dealers will try their best to lure you into purchasing something you cannot afford, even if it means pushing you into a loan that will haunt you for years. They will distract you with low monthly rates, thereby keeping you from looking at the interest rates, a high purchase price, and also the fact that you may end up paying the loan for seven or eight years.

It is always essential to research before considering a purchase. Compare various lenders and keep an open mind when buying vehicles. Making a sound and informed decision will help you save money.