Financing with the help of car dealership can cost you more than traditional banks or other financial institutes. If you have a bad credit, opting for the latter will prove more convenient for you. There are a number of banks and money lending institutions that offer various schemes on the purchase of both used and new cars.
However, before opting for these financial institutions, you need to understand the drawbacks of financing with your car dealer while buying a used and new cars.
- Financing your used or new car through a car dealership is usually very expensive. The interest rates charged by your car dealer is almost double than the one charged by traditional lenders.
- There is actually a third party who finances your used or new car. Therefore the charges are high, as you pay for both the actual lender and the intermediary service provider.
- Moreover the car dealerships offer financing only for the cars they are selling. Therefore you will have limited options for car models and brands.
Traditional banks and money lending institutes:
You can approach your bank or any other lending institution for financing your used or new car at a very reasonable rate. These types of car loans are usually secured loans. Therefore their interest rates are much lower than unsecured personal loans.
You will need to show proof of a clean credit report and other necessary documents in order to get your loan approved. To ensure that you can afford the monthly payments, you will also have to submit a proof of steady income.
With a car loan approved by traditional lenders, you can conveniently buy used and new cars. You can even bargain for the price of the cars, if you are visiting the car dealerships after your loan is approved. Therefore you have a wide range of options as to the brand and model of the car.
In case you have irregular credit and income situations:
Many people with bad or irregular credit and income often opt for financing with car dealerships. However if you are facing a similar situation, you can conveniently select any reputed non-traditional lenders. Though their interest rates are high, they are much cheaper than interest rates charged by car dealerships.
There are several other benefits of non-traditional lenders. Though you will have to show a proof of your income, there is no need to prove that you are doing the same job for several years and that your salary is deposited directly to your bank account.
Therefore if you have no major criminal issues in your credit history, you can easily get your loan for used and new cars approved by non traditional lenders.
Car Dealership Financing
