Car Loans

Where to Get a Car Loan?

There are three most common sources of car loans—banks, loan brokers, and dealerships.

By TheCarzingTeam March 17, 2019 | Car Loans

Car Loans

With the excitement of finally driving home your dream car, your emotions may get the better of you. Buying a new vehicle is not just about finding that right car for your lifestyle and preferences; you also have to decide how you’re going to pay for it.

For many car buyers, choosing the right funding to finalize a car purchase often comes as the last priority. That is why many of them end up not being able to make the acquisition happen or spend much more than they should on the purchase.

While it is an undeniable fact that cars are getting costlier for many Americans these days, auto financing is also getting more expensive and more elusive. This is why it is important for you to better understand where you should apply for and obtain car financing.

“Auto financing is also getting more expensive and more elusive.”

There are three most common sources of car loans—banks, loan brokers, and dealerships.

Bank

If you want to go traditional when financing your car purchase, you have to deal with a bank. Lenders generally offer secured car loan options, which could possibly bring about car loans with attractive interest rates. The common setback is that banks are often very stringent when it comes to looking at your creditworthiness. If you have a low credit score, this may translate to a lot of stress as you may not be able to easily find a good bank-financing for your car purchase.

Many car loan applicants complain about the tedious requirement on documentation. Preparing such documents may take some time on your part, and on the bank’s end, verification may last even longer. If you are somehow in a hurry, a car loan from a bank may not be a good option. But if you are after security and a chance to get a more reasonable rate, your patience will prove to be a great investment.

“The common setback is that banks are often very stringent when it comes to looking at your creditworthiness.”

Finance broker

If you dislike dealing with a lender, taking the less traditional route will be a promising decision. A major advantage of going with a finance broker is that you can get numerous options—and this may mean more chances of getting a very attractive loan with good terms and lower interest rates.

The finance broker can also be more flexible when it comes to loan approval. It usually enjoys access to numerous lenders, making it possible for it to offer more and better options. If you are worried about your low credit score or if you usually get rejected when applying for a bank loan, a finance broker could bring about a positive outcome without requiring you to pass through the eye of a needle.

“A major advantage of going with a finance broker is that you can get numerous options.”

Dealership

For those who love taking shortcuts, financing through a dealership for a car loan is definitely the best measure. However, it is a route that is usually flawed.

One advantage of getting a car loan through the dealership is its overall convenience. A dealer with its own in-house finance unit can make it possible for you to sign up for a car loan immediately so you can drive home your dream car in just a matter of hours.

But, as you know, convenience does not come without a price. One of which is the cost. Do not be surprised if an auto loan you get from a dealer comes with an interest rate that is higher compared to its counterparts from banks or finance brokers. Dealerships also have access to less financing, this may mean not being able to get a car loan when and where you want it and being presented with fewer options.

“For those who love taking shortcuts, financing through a dealership for a car loan is definitely the best measure.”

So which car loan provider is for you?

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