- Home equity: During the peak of the real estate bubble I saw up to athird of my clients use home equity loans or lines of credit to finance a (^)
car. While I don’t think we’ll ever see those kinds of numbers again,some may still be able to take advantage of this source and the tax
deductions that it allows.
When you go through the dealer to use a certain lender, it is called“indirect” lending; when you deal with the bank directly, it is “direct” lending. (^)
This can be a bit confusing. As an example, you could get preapprovedwith your credit union as a direct loan, but then go to the dealer and
complete the loan paperwork at the same interest rate using a preapprovalcode provided by the credit union, just like an indirect deal.
In a direct lending scenario, banks and credit unions will give you their “buyrate,” which means there’s no additional interest rate markup in the loan
(though they may pay bonuses to a loan officer). Many of these samelenders also work with dealers. The buy rates they offer the dealer can be (^)
the same as what they’d give you, less, or more. There isn’t any clearpattern to this, so it worth getting preapproved with a lender (direct loan) (^)
first.
dealer is marking up the buy rate.TIP: Getting pre-approved is essential if you’re to know when a^
barry
(Barry)
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