Auto Financing Options: Car Dealership or Direct Lender?

Car Dealership in Indiana When you’re short on cash and need financing to buy a car, you basically have two options: financing from car dealerships or direct lenders. The fact is that many dealerships will be happy to offer you a loan, however, is it the better option? How can you really be sure which financing option is best for you?

Car Financing from Direct Lenders

Direct lenders are essentially traditional lending institutions such as banks, credit unions, or finance companies. You will offer your loan over a predetermined time period, along with the financing fee or charge. When you have a contract with a car dealership to buy your car, you basically use the car loan you got from the direct lender as payment for the car.

With direct lenders, you have the opportunity to look around and inquire about loan offers from several lenders so you can compare all the loan options available to you. You likewise get your credit terms (rates, period, etc.) upfront prior to purchasing a car.

Car Financing from Car Dealerships

With financing from a car dealership, you basically get a loan straight from the dealership where you’ll be buying your car from. While dealerships could retain your contract, they usually sell it to direct lenders, known as assignees in this case, that will service your account and collect your monthly payments.

With dealership financing, you won’t have to shop around for auto loans since they can offer several options due to their relationships with various lending institutions. This means that they basically offer pretty much the same loan options that their partner banks, credit unions, and finance companies do.

You also get to avail of incentive or low rate programs sponsored by manufacturers, considering that you qualify for them since the main requirement is usually a strong credit score. If you have a relatively low credit rating, you can ask the dealer if they offer loans for people with low credits scores, suggests Blossom Chevrolet, a loan specialist in Indiana accommodating bad credit car loans.

Make sure to look around prior to agreeing to an offer and signing a contract. Consider all options available to you whether they come from direct lenders or car dealerships. Making comparisons is the best way to determine the exact type of car and financing terms that fit your requirements. Lastly, make sure to pick the car loan that you can comfortably pay off in the next few years.