When it comes to getting an auto loan for a new car, you have many options available to you, and it's worth exploring them all to see how you can get the best offer. Some come through banks and dealer financing, and others are less traditional, but altogether they provide you with several options to explore for a quality loan.
Financing From the Dealer
Many dealers provide financing themselves via indirect loans, and if you have good credit, this could be an easy source of financing. They won't necessarily provide the best possible interest rates, but if you have already calculated roughly what interest you should be able to get based on your credit and the car you're purchasing, you can safely explore dealer financing as a potential option.
With dealer financing, you may also be able to bring in preapproved offers from other lenders as a way to negotiate. If your credit isn't as good, financing through the dealer may also let you gain access to a loan you might not be approved for elsewhere; however, being aware of what interest rates you should expect is still important.
Banks and Credit Unions
Banks and credit unions are popular alternatives to dealer financing and can offer competitive rates based on your credit score. Because these loans are direct, you may be able to get better interest rates, which could make the extra work of getting a loan outside of the dealer worth the trip. Further, you can explore options from different banks before choosing one, and if this is an option, you can also have a cosigner on your loan to potentially get even better rates.
Many banks will require you to have at least a checking account with them before you can be approved for a loan, so if you aren't a member of a bank you are strongly considering a loan from, this may need to be taken into consideration. However, with good enough rates, it may be worth opening an account to take advantage of the loan.
One option outside traditional banks is online lending, or peer-to-peer lending. Online lending connects lenders and borrowers that work outside traditional banks, and while they still perform credit checks and require approval, this can widen your opportunities significantly by giving you many more options to choose from.
These typically won't be your first options, but if you aren't able to find something through more traditional means, these can still provide you with valuable options. These will still usually be better than title and payday loans, which often have very high interest rates.Share