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Dealer vs. Car Financing: Which One to Choose for Your Car Loan?

If you have decided to buy a car, you must be well aware of car loans. You might have even applied for a car loan to procure your dream car.

However, most people might not know that a bad credit score will affect the process of getting a car loan. Should your dream of buying a car take a stop because of a bad credit score? Not really.

They want to make some points clear on this matter. With the guidance of the experts, you will know which financing option would be better for you.

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Costly Endeavour

It is costly to buy a car. Even if you try to buy the largest fridge or the flattest TV screen, you have to put your best thought and money before buying a car. After you select that one car – just made for you – that one model that stands above all the rest; the real challenge comes up only after that – you have to pay for it.

If you have not saved the cash to pay the total amount, obviously you have to go for a car loan. But there are many options, how will you find out the best one for you? To make this simple, there are two options for car finance – Bank Financing or Dealer Financing.

Longer-Term Payments

Everyone wants the best deal, and you must first know which one you are going for. While the right long-term payment option can help you become a blissful owner of a great car, the wrong one can make you regret the decision for years in the end. Read the rest of the article to know the suitable option for you.

Bank Financing

Do you want to avoid middlemen, such as dealers during the process of car purchase? Yes. In that case, you should opt for a bank financing option. 

In case, you are wondering why it would be so, the reason is very simple. Unlike dealers, where you would need to pay a huge commission; with financing options from the bank, the rate is very low. All that a customer needs to do is to use other products offered by the respective bank, like their credit cards or bank accounts. 

Often, using certain products of the banks can provide a massive discount on the interest rate. However, banks would suggest customers pay more for the car or invest in other things which you might not have thought about. 

The experts of 411 Drives like to point to the fact that before applying for a car loan from a bank, certain factors should be considered. The factors are:

  • Cost: What amount should you shell out for the car? The amount would vary from one bank to another. It would depend on the car cost and also the amount you will need to repay the bank.
  • Eligibility: To become eligible for a car loan from a bank, the requirements are usually stricter than the ones offered by a dealer. This means that the borrower needs to meet certain requirements to get their loan approved.
  • Interest Rate: The interest rate on the loan amount is not at all negotiable. Hence, customers would need to stick to the interest rate placed by the bank.

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Pros and Cons of Bank Financing


  • Customers get competitive pricing.
  • More personalized service from bank financing.
  • Payment terms are interesting as the interest gets even throughout the loan term.


  • Customers can’t negotiate on the interest rate.
  • The loan terms are very strict.
Pros and Cons of Bank Financing

Dealership Financing

Many customers find dealership financing a great option in comparison to bank financing. Why? The reason is simple. Once the loan gets approved, customers can buy and drive home their new car.

What is It All About?

In dealership financing, the dealers take the credit information from the customers and send it to various lenders. Once a lender approves the credit information, quotations are given to the customer.

The customer can pick up a quotation and start to negotiate further. Many customers consider dealership financing to be a great option as the payment terms are flexible. However, there is more to it.

The professionals of 411 Drives state that dealership financing is a type of business. Hence, dealers would look forward to making money from a deal. Hence, the rate of interest might be high in the long run.

Often, late payments lead to huge penalties. Some dealers might stretch the period to diminish the monthly payment. But a customer ends up paying more than the actual cost of the car.

Pros and Cons of Dealership Financing


  • It is very easy to avail.
  • A customer gets to choose offers from many financing companies.
  • Competitive rates are available.


  • Low interest rates are very rare.

By now, you must be well aware of the fact that taking a car loan from a dealer is a far better option.

Still, if you are in any dilemma, you can ask the loan consultants of 411 DrivesThe experts would guide you about the loan term as well as the interest rates. Once you get a good picture of it, you can easily seal the deal.

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