Are Bank Auto Loans Better Than Dealership Auto Loans?
You finally found the car of your dreams, and you have negotiated a price for it, but you can’t drive home just yet. Unless you have enough money to pay cash for the car, you are probably going to need financing. So what is the best way to finance: a bank loan or dealership financing?
Dealerships offer their auto loans through banks that usually do not go the extra mile to save you money. Dealerships usually work on commission, even when it comes to setting up an auto finance loan. Consequently, they may overcharge you on your loan. Dealerships also do not have as much knowledge about car loans as third-party lenders do. Car dealerships are in it to make the most money off of the customer as they can; that is how they stay in business. You will also need to have good credit to get approved. If you have poor credit, you are more likely to either get denied a loan or pay obscenely high interest rates.
It makes more fiscal sense to go to a bank to get your auto loan. They are there to help you find the best auto loan you can get. They have highly qualified people that will review your credit score, find the lowest interest rate, and find the most reasonable plan for you. The car dealership does not care about you; they will get their share of loans because people do not want to wait to get their loan after they just found the car of their dreams. Banks can compete over your loan and offer you better services. You can even go on line to get your auto loan and get approved almost instantly, even with poor credit. If you can avoid the temptation of getting a loan at the dealership because you want to drive home in your new car that day, then getting your auto loan from a bank is a much better option.
For some, their car payment is the second largest payment they have to make after rent or mortgage payments. Making sure that you are not paying outrageous amounts of interest is important. By financing through the dealership, most times you do pay the most they can get from you. Another thing to watch out for is that some dealerships will charge a monthly fee just to get a loan through their company. This will cause your auto loan bills to go up and potentially cost you thousands over time.