Buying a new vehicle is indeed costly – if you don’t save enough money for the total cash amount. After choosing the car of your dream that puts some diamonds and glitter in your eyes, the real obstacle will begin – paying for it.
Payment will not become an obstacle from driving your dream car if you have saved enough money to pay for it. If that happens, a car loan application will knock on your door. But with hundreds of options to choose from, which one do you think is the best and will suit your needs?
To make it short, there are two popular options for car loan application: Dealer financing and Bank financing. If you want to get a great deal and affordable options between these two, it’s essential for you to know all the details regarding that financial services they’ll provide.
Below are the simple explanations of these two options:
Talk About Bank Financing
In bank financing rates are sometimes lower compared to dealers. Because, since it’s a bank, it only means that there’s no middleman involved in the loan application process. You just need to have a good credit score and make sure to use the bank’s other products such as credit cards, savings, accounts, and etc. Besides, choosing the bank where you put your savings on will give you much lower interest rates as well.
Sometimes, a bank will have a financial advisor with you to talk about some important details regarding the car loan. They will honestly tell to you that the chosen car would be too much for your current financial status. So if your desired car is too much for your current financial status, you have the option to choose another car that will match your financial capabilities.
The Pros
- Banks have competitive rates compared to dealers
- Banks offer personalized services such as financial counseling and so on
- Banks have solid payment options
The Cons
- Banks rates are non-negotiable
- Banks have stricter requirements compared to dealers
An important tip to remember: Seek a bank agent first about the loan offer they are willing to provide with you before going to a dealer to compare the prices and the rates.
Talk About Dealers Financing
One of the most attractive processes of a dealer financing for the buyers to think is that “they finance, you purchase, and drive your dream car on the same day!”
Actually dealers financing is very convenient, they’ll get all of your credit information, and they’ll send that information to different banks and lending companies; once the loan application is approved, an auto quote will be sent for you to have a decision to make and they’ll negotiate it with you for more detailed information. Well, with this kind of convenience, it is sure that this is the best option.
But behold, there are secrets that need to unfold.
For dealers, business is business. They also need to earn a profit in every deal that they make. Because of this, the interest rates could go higher than expected. Besides, late payments on dealers mean higher penalties.
Well, it’s up to you. Your money, your choice. If you are financially wise, then go with the banks. But if you like the comfort of convenience, then go with the dealers financing.
