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How do I get financing to buy a car from a dealership?

The Benefits of Financing a Car through a Dealership

When it comes to buying a car, there are two big choices that buyers need to make. The first is what type of vehicle to buy. The second is how to pay for the vehicle. Some drivers choose a lease, but most people choose to buy the car outright. When buying outright, there are usually three options: paying cash, financing through a bank, or financing through a dealership.

Many people do not have the cash on hand to pay in full for a car. For that reason, they choose financing, which provides flexibility and a range of options for loan term, interest rate, and more.


Having a Dealership Find Financing

Financing a car through a dealership works the same way as bank financing, but it is simpler. Instead of the buyer having to contact multiple banking institutions for their auto loan rates and information, including multiple inquiries into your credit, the dealer does all the work on the buyer's behalf.

The dealership will have buyers fill out a credit application, which will be sent to multiple lenders to find the terms that meet a buyer's needs. This allows buyers to compare rates, terms, and institutions to choose the best option.


Manufacturer Financing

In other cases, automobile manufacturers will offer promotional financing on brand-new vehicles or certified pre-owned models, including rates as low as 0% APR to those who qualify. In general, buyers can usually get lower interest rates on brand-new cars than on used vehicles with any type of financing.


In-House Financing

For buyers with bad credit or no credit, there are also dealerships that offer in-house financing, such as "buy here, pay here" dealerships. However, the interest rates, down payment requirements, and loan terms are often much more than with traditional financing through a bank or auto manufacturer.


Finding the Right Car Financing at a Dealership

It is often difficult to know which financing option is the best choice. Buyers should prepare themselves before stepping foot inside a dealership. By contacting a bank or credit union ahead of time, buyers can compare the dealership financing to the rates and terms offered directly from a bank. This allows buyers to know which financing works best for them. Often the bank and dealership financing rates will match, but it is always good to consider all options before making a commitment.