How To Weigh Your Car Loan Options

                                         

Dealership vs Bank vs Online

When purchasing a car, most people focus on their brand new vehicle and forget about the financing that follows. With the majority of car buyers financing their vehicles, it is important to not only focus on the purchase, but also to consider how that purchase will be financed. Car loan options.  Just how do you sort through them?

Whether you choose the indirect route (from the dealer) or the direct route (from the bank or credit union), with just a little research, and perhaps with the help of a revolutionary resource, you can get both your new car and your favored loan.

Let’s see if we can help smooth out some of the confusion.

Dealership (Indirect Financing)

It is an exciting thought to go to the dealership, choose a car, get it financed, and then drive off the lot with your new purchase all in a day – everything at one place in one day. Truth is, it can often take the entire day to complete the process.  But why?

Dealers can spend hours, sometimes days, trying to place your application with a lender.  They can also be incentivized by fees they receive from lenders, which may impact where they place your loan.  No surprise, they want to make money.  Just be sure it isn’t at your expense.

Many people also appreciate the dealers’ promise to help buyers with challenged credit. It is important to note, however, that these loans may have very high interest rates as a consequence. In fact, 20% interest rates and higher are not uncommon.  And it’s on you to shop around.

Another advantage to financing at the dealer can be the promotions offered by auto manufacturers. For some buyers who meet specific credit criteria, this can be an excellent opportunity not found in other places.

Pros & Cons

Along with the pros, there are some cons that should be considered.

Naturally, the dealers aim to make money on your purchase as well as on your financing, which is why they often urge buyers to complete the entire process with them.

Sometimes dealers will advertise a “financed in-house” price, which appears to obligate the buyer to secure financing for the car from the dealership.  This is negotiable, and securing your own financing outside the dealership does not automatically require that you pay a higher price for the car.

Keep in mind, dealers have agreements with a specific portfolio of lenders, and they will submit your application to those lenders.  If there is a better matched lender in the marketplace, and the dealer does not have an agreement with them, your application won’t be submitted to that lender.

It is important to do the research of the pros and cons before choosing this or any financing option.

   

Bank / Credit Union (Direct Financing)

Going to the bank or credit union is another option for financing your vehicle. This route may be particularly appealing if you have a good relationship with your bank.  They will usually work hard to get you the loan you want.  By going through the bank, you also have the option of shopping around at different institutions.

The constraint in this case is that there are hundreds of lenders in the marketplace, and you will need to do the legwork to compare your options. This can take days, can lead to excessive credit inquiries, and may still leave you wondering if you could have found a better option.  How do you know?

Lending institutions tend to be candid about the loan and its conditions. There are typically fewer unwanted surprises that come up after the loan has been agreed upon. Keep in mind, however, that advertised rates and a firm loan offer can be markedly different. To access the latter, the lender will need to pull your credit and know the specific details of the purchase you are making.

Getting your financing directly from the bank makes the most sense.  However, absent the ability to rapidly comparison shop means you may have just contracted your loan for hundreds–even thousands–of dollars more than necessary.

Online

A third option for sourcing your auto financing is Online.  Some companies will make offers to get you financed by taking only a little information.  Be advised, this is generally not the same as getting a reliable offer from a bank.  Because as we mentioned above, a bank or credit union will require access to your credit history, as well as the specific details of your car deal, in order to evaluate and offer you hard terms for your loan.

Go BankHunter (Direct Financing Matchmaker)

Visualize gettting a car loan without having to leave your house.  Or from the comfort of your own couch.

Imagine a Finance Manager with over 30 years of experience in car dealerships writing a software platform that works for you.  Immediate, unbiased credit evaluation and direct lender matching, with no surprise fees, no waiting around for hours, and no inflated interest rate.

Ask yourself, would you wait 2 hours for a surcharged flight itinerary?  Or wait days to receive AirBnB options?  Of course you wouldn’t.  The options are immediate and clear, as they ought to be with your auto loan.

Take 2 minutes to complete a free application at BankHunter, and you will immediately be matched with the top three banks for your car deal.  Apply to the top recommendation and you will typically get an approval, at the direct interest rate, within 15 minutes.  Apply to all recommendations if you wish to compare.

BankHunter slashes 98% from credit decision times, and points to a better-matched lender 98% of the time.

Why waste hours, possibly days, only to end up paying a higher interest rate?  You can have a great buying experience and the best terms, without the need to go to “car buying school”.

Fast.  Fair.  Free.  Get it all from BankHunter.