Financing Options at Car Dealers

If you plan to buy new or used vehicles from car dealers, you will need to decide how you will pay for them. You can buy it with cash, get a loan from a bank or credit union, or take advantage of dealer financing offers. There are advantages and disadvantages to each option and the best option will be different for each buyer.

Pay cash for your car

If you plan to pay for your vehicle with cash, congratulations! You are in a minority of buyers, although this is always a great option. When you arrive at the dealer armed with cash, you are trading from a position of power. The average motorist who pays cash has often been saving for the car for some time. Budget gurus often advocate starting saving for your next vehicle when you drive a new one off the car dealership lot. This is similar to making monthly payments, except you are paying yourself. It takes self-discipline to do this, of course, but you can save a lot of money in the long run due to zero-interest payments.

How to get a loan from your bank or credit union

If you belong to a credit union, it’s wise to talk to your loan officers about financing before you even walk through the doors of a car showroom. Because credit unions are not for profit, they often have low interest rates for financing. There are also usually fewer fees and costs associated with taking out a loan from a credit union. If you have your checking and savings accounts at a local bank, you can also get pretty decent rates through them. It’s always wise to gather information before purchasing your dream vehicle so you’ll be ready to sign on the dotted line when the time comes.

Financing through the dealer

One convenient option is to finance your new car through your car dealer’s business office. They have the ability to check your credit, set up a payment plan, and have you out the door in your new car before you know it. Sometimes their rates are higher than those of outside banks. Because this option is so convenient, there may be a higher cost for the convenience. Come armed with knowledge about other banks’ rates so you know what a good deal is when you see it.

Buying a new or used car can be an exciting event. You’ll have the key to your dream trip before you know it if you find financing up front. Consider the options of paying cash, getting a loan from your own credit union or bank, and taking advantage of convenient on-site financing at car dealerships.