What's the catch when a dealership offers lower APR financing than a credit union?

I've been shopping around for car loans and was told to always look at credit unions first. However, when I look at credit unions, their rates are around 4% while the dealer is running a financing special at 2.99%. Is there a catch to getting financing through a dealer?

“Sometimes, dealership specials or those run by the automaker’s finance department can offer lower rates than credit unions.
However, the devil is in the details.
You should keep a watchful eye to see if there are any prepayment penalties, as well as if the dealer can change your rate to something exorbitant if you miss a payment. There could also be a stipulation that you aren’t able to finance the vehicle.
With a credit union, you won’t have to worry about these issues 99% of the time, but it’s important to review your contract.
You should always read the fine print and do your homework before signing a lending contract.
Don’t forget that your new car needs proper coverage. Use the free Jerry app to help you find the best deal. Jerry compares rates from the top 50 companies in under a minute, delivering the best deals to your phone.”
Eric Schad
Answered on Jul 30, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.

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