Where to get a car loan: a bank or a dealer
- 266071.00 Rs.
- Published date: March 22, 2021
- Qingdao, Anchor Point, Alaska, United States
You're ready to buy a car, but first you need to figure out the right way to finance it. The good news is that you have a choice: You can get a car deals and loans from a bank or credit union, or through a dealer. While both have their advantages and considerations, it's always a good idea to know your financing options before asking for the key. Here are three auto financing tips to help you make the best decision for yourself.
Research your bank's financing options before you start shopping
Talk to the bank first. Even if you haven't picked out a particular car, you can usually apply for a bank loan. The experts there can help you understand the loan application and the loan process and what to expect when you go to the dealer. Approval can be quick, especially if you have an excellent or even good credit history, and the bank typically locks in the interest rate for a certain period of time during the shopping period (say, 30 calendar days).
Banks usually advertise promotional interest rates on car deals and loans. And, if you are already a customer, help with your loan approval process. Banks often consider relationship history when making lending decisions, and they may offer you a discount on interest rates or other benefits. It is also convenient to manage a car loan with other financial accounts. For example, you can set up due date reminders and automate auto loan payments, and get help in person every time you visit a branch.
Make sure you understand where the loan under consideration can be used. For example, bank loans are available to most franchisees and some independent dealers. If you buy a car from a private seller, you can also use a bank loan.
If you need an alternative, you can browse online resources for car loans, although you may not be able to get full details about loan quotes until you select a particular car. Online lenders may also have different rules and restrictions than banks.
After choosing a car, learn about dealer financing
Once the car is picked up and approved, it makes sense to consider the financing options offered through the dealer. The dealer will own the auto loan application and may send your auto loan application to more than one lender. Each lender will withdraw your credit report just as a bank does. They will then send a quote to the dealer.
If you get a good financing opportunity this way, you can see if the bank wants to improve terms to win business. You can also try to get the dealer to lower the price of the car a little bit.
Sometimes, dealers offer financing to buyers with low credit scores. The dealer may also offer you more incentives to use its financing, such as interest rates of 0%, often for a short period of time, or discounts on optional features of the car, such as safety systems or seat heaters.
Please note that if you choose to finance through a dealer, you will have no control over who ends up providing the loan. Therefore, if the lender is not nearby, you will not be able to resolve the issue about the loan yourself.
Compare your final car deals and loans offers and then make your choice
For each type of financing, make sure you understand all the terms and conditions and confirm that the fees are within your monthly and long-term prepaid budget.
Determine the total amount you will pay for the car over the life of the car deals and loans. Then, see if the tradeoff is worth it. You might not mind offering a long-term loan in exchange for a higher overall fee in exchange for a lower monthly payment. Or maybe you just want to know the bottom line, in which case rebates or lower interest rates could be the deciding factor.
After weighing all the possibilities, you can make an informed choice about whether it is better to finance yourself through a dealer or a bank. You can close the deal to buy a new or used car and be sure you've found the right deal.
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