Getting a Car Loan at the Dealership: Is there a better way?

Purchasing a car loan can be really stressful. Most of us don’t like doing it (myself included). But before you buy your next car, make sure to know the ins and outs of getting a car loan, if you want to go that route. And make sure to know about getting a car loan at the dealership and what that entails. Let me explain.

Getting a Car Loan at the Dealership

Getting a car loan at the dealership may not be a bad choice in some circumstances. You must first make sure that you are buying a vehicle that fits the proper metrics for your situation though. Here is an article explaining the guidelines that you should use when purchasing a vehicle.

There are some pros and cons to getting a car loan at the dealership.

Pros:

• The dealership will shop your potential car loan to several different banks and credit unions at the same time.
• Those banks and credit unions will compete for the lowest rate for you.
• It’s really a pretty easy process.

Cons:

• The dealership will usually mark up the interest rate. This means that if the bank approves you for a 4.5% APR, the dealership might charge you 6.5% APR and pocket the 2% difference.
• You can usually get a better rate from your local bank or credit union than what the dealership could offer.
• You might lose negotiation power because the dealership will have a better idea of what other debts you carry, income you have, etc.

Alternative to Getting a Car Loan at the Dealership

The best alternative to getting a car loan at the dealership (other than paying cash for the vehicle) is to go to your local bank or credit union.

From the lending perspective of your bank, they will be more likely to grant you a more favorable loan because you already have a relationship with them. You have a debit card, direct deposit, a savings account, etc. 

So before you go to the dealership to look at cars and try to get approved through them, check out your local bank or credit union first.

Final Thoughts

As I said, getting a car loan can be a stressful process. Do the best you can to take as much stress out of the situation as possible. 

The bottom line is to make sure to not buy a more expensive vehicle than you can afford. Here are the guidelines for how much car you should buy. 🙂

I am here to help you!

Until next time!