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Car Loan Financing Through Dealership Or Bank?

Car Loan Financing Through Dealership Or Bank?

When it comes to financing your next car, there are mainly 2 different routes you could take; financing through a dealership or bank. So, how could you know which route to take? Everyone’s situation is different and there are certain times where you would choose one over the other, this article will discuss the main reasons for and against each option.

 

I heavily encourage you look around and do your research if you want to find the best deal to save you the most money as possible! If you would like to know more about what is involved in each of these options, check out our other articles: (Bank, Dealership)

 

Auto Loan Financing Via Dealership

 

Dealerships are generally easier to go through compared to a bank, you send them your application and they will do the rest of the financing work for you, and you will be handling the finances at the same place you purchase the car.

 

This however, comes at a cost, literally. Dealers rates have to be marked up in order for them to make money so they may end up being higher than a bank loan. The other downside of this is that the dealership may be in contact with a bank that is too far away for you to just walk into if there is ever an issue or any questions regarding the loan.

 

A benefit of dealerships is that they are often offering low rates, and they will commonly have promotions such as a 0% interest plan for an amount of time. They are also able to add customization options to the car that you would otherwise not have (such as seat warmers or a security system). It is important to note though, that many dealerships only have promotional activity on their new models.

 

Dealerships are often more accommodating when it comes to credit score. Banks tend to be more lenient towards those of us that have good or great credit scores (660+). With Car Nation Canada Direct for example, anyone can qualify for a loan no matter what credit score.

 

Auto Loan Financing Via Bank

 

One of the biggest advantages of auto financing through a bank is that there is no middle man (the dealership), so there will be no extra mark up rate for interest which could give you a better deal.

 

To go along with this, the bank you choose to go with will likely be close to home making contact about your loan that much easier. Another advantage of having no middle man is that banks can often give approval quite quickly, especially if you have a good credit score!

 

A car loan from a bank allows you to be completely pre approved and ready to buy before you even step foot in the dealership, which means you don’t necessarily have to decide exactly what car you want first.

 

Also, bank loans can also be used for any dealership or even private sellers, instead of being limited to the dealership that you would otherwise be applying with.

 

Unlike dealerships which are quite negotiable and accommodating, banks tend to steer away from those that have a bad credit score and may give you a worse deal than what you could otherwise get with a dealership.

 

They are also less comfortable with negotiating things like interest rate, the amount of the loan, and other terms of payment.

 

Thank you for reading! If you are looking for your next car or would like to be updated when we release more articles like this, be sure to connect with us on our Facebook, Twitter, Instagram, or LinkedIn pages!

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