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What's the major difference between financing through a bank or through a dealer?
"What's the difference between going through the dealer for financing or going directly to a bank? I was going to buy a car through the dealer and they said they offer comparable rates to banks and credit unions."
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“In some cases, there’s no difference at all. Dealers commonly work with these lenders in a process called dealer-arranged financing. Essentially, you’re trusting them to shop for
new car
loan rates on your behalf.Because they’re shopping for you, you have no way to know if you’re getting the best deal.
In some cases, dealers will arrange financing that gives them a kickback. As a result, shopping for a car loan rate on your own can help you save money and determine what a fair interest rate is for your income and
credit
.”View full answer
- Gregory R.
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