Personal Car Loans vs Dealership Loans

Many consumers turn towards personal car loans as an alternative to using traditional car dealership loans. Car dealerships have their own financing departments that can finance with a variety of different programs. Although it can be enticing to go with a car dealership loan, you might be able to find a better deal with a personal car loan. Here are a few things that you may want to consider in regards to personal car loans vs dealership loans. 

Dealership Loans

Dealership loans are offered through the credit department of the respective manufacturer in most cases. For example, if you go into Mazda to buy a new car, they will refer you to Mazda American Credit to get a loan. The big advantage of going with a dealership loan like this is that you can take advantage of some major promotions from time to time. Every now and then they will run a financing special that you can use to your advantage. For example, they might have a zero percent APR financing offer for a limited time. If that is the case, you are not going to be able to find a lower interest rate anywhere else. However, at other times of the year, when they are not running something like this, you might be better off going elsewhere.

Personal Car Loans

With a personal car loan, you will have to go out into the market and find your own deal. You get the best price that you can get from the dealer as if you were paying cash. Then you go shopping for an auto loan. With as many options as you have in front of you, there is a good chance that you are going to run into a nice loan program. If you have good credit, you should have no problem getting a low interest rate out in the open market. If you work with a particular bank or lender for everything else, you should definitely check with them as well. They may be able to give you some sort of a special rate as a result of all of your past business with them. 

The drawback to this sort of strategy is that it will take some time. You will have to go out and visit multiple lenders and try to get the best deal. Finding a lender will take more time. It is up to you to find the best deal and arrange everything. 

Which Method is Better?

There is no definitive answer as to which one is better all the time. The best thing that you can do is just compare all of your options. The dealer has the ability to offer you better deals from time to time because you are still buying a car from them. Therefore, if you time it correctly, they can give you a better deal. Otherwise, you might get the better deal out in the open market. 

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