Is Car Financing through a Dealership better than through a Bank?
- Car Insurance,
- Sep 13, 2019
When you want to finance your car, there are a plethora of options laid out before you. You can choose from any one of them, and all of them have advantages over the other. Whether you decide to take a car loan, get a car on a lease, or get some other type of car finance, you will have to be careful in making the final decision as some car finances can actually help you save some money and be beneficial as compared to their counterparts. How can you find this so-called ‘beneficial type’ that helps you so much? What does it do that helps you? Why is that so?
Worry not, for we are here to answer all these questions and inform you all about the car finances that there is and even tell you some more tips regarding car financing through a dealership and through a bank, and compare which is better.
Let’s learn first about car finances. What are car finances, people might ask? Well, it’s really simple and everything related to ‘finances’ to purchase a car are termed as car finances. There are a lot of types of car finances which include car loans (both secured and unsecured auto loans), bad credit finances, car lease, mortgage car finance, etc. You can learn a lot more about these types here.
In short, if you could not afford a car and wanted to get some money from a credit union, a bank, an individual or some other type of lender, you will be getting a ‘car finance’. Do note that car finance does not include any loans or finances that are not meant for the sole purpose of acquiring a vehicle. Business vehicle finance is another type of car finance that deals with car loans specifically for business vehicles like vans, trucks, etc.
Financing through a Bank:
The most direct way to acquire car finance, or in layman’s terms, a car loan, a person can simply head over to their nearby bank and ask for one. They will list out the details, restrictions, repayments, charges, interest rates, and everything the person needs to know about the loan. Do note that it is up to the person themselves that they should compare the car finance rates and pick out the best loan type for themselves. Bank also varies the finance depending on whether you are getting a used car loan or a new car loan, both of which have different packages dealing with them and have different car finance rates.
There are several advantages a person can get by applying for finance through a bank:
1- You can get the actual amount of loan you are going to get and the one which you are going to pay back with interest. This is usually useful because other parties charge you a little more as a commission for being the middleman between you and the actual party that provides you with the loan.
2- You will get your loan before you visit the dealership. It is much convenient since you know your budget range and can decide better this way, and having a pre-approved loan also makes a good impression on the dealership managers.
There are a few drawbacks that come with getting a car from a bank:
1- The interest rate might be slightly higher depending on the choice of your vehicle.
2- You will have to decide on which car you want as the bank would ask for specifications of the vehicle, so the vehicle to be purchased must either be pre-planned or fall into the same budget range of the vehicle you applied to finance.
Financing through a Dealership:
One of the alternatives to financing through a bank is financing through a dealership. It is a method where you can apply for auto finance through a dealership. This happens when the dealer submits an application on your behalf to a number of lenders and lets you choose the best plan.
1- You are free to compare the car finance rates among the different lenders’ packages and choose the one that suits you the best.
2- You can choose any car you want at the dealership and are not restricted to a specific budget.
1- Dealers charge a little more than a bank to get a little profit they take as a commission since they got the loan on your behalf.
So, is car financing through a dealership better than through a bank?
To be honest, it all depends on several factors and since these factors are of a large number and vary from person to person based on their credit score, their choice, their lifestyle, their needs and wants, etc. it is quite difficult to devise a general answer for everyone. You can always compare the two yourself and see which is better for you.
No matter which option you choose, you should never forget to perform the necessary background checks and other checks like VIN check, etc. just to be on the safe side, and there is no better option than QuickREVs to do it for you!