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Which is better, a line of credit from my bank or dealer financing for a new car?
"Do you get a better deal financing a car at a dealership or through a bank? I have an appointment to meet with a dealership today about a new car that I want to buy. I have applied for a line of credit from my bank, but they have not gotten back to me yet about interest rates or terms."
Johnny Puckett · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“You would probably come out better using your own bank’s financing to
buy a new car
. Sometimes, it can be quite a bit of difference. On top of financing charges, the dealership could also work in hidden fees and a dealer reserve, which adds 2% to the interest rate that you actually qualify for through dealer financing.
You would be better off ending your meeting with the dealership by saying you are considering your financing options and waiting to hear back from your bank.
If you do go with dealer financing, consider a large
down payment
and the length of your loan to avoid paying too much in interest.”View full answer
- Gregory R.
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