Why your financial institution is the best place to get an auto loan
Looking to buy a new vehicle? If you’re like most people, you probably plan to use an auto loan to finance your new purchase. And if that’s the case, you’ll need to determine the best place for you to obtain financing.
Where you receive an auto loan can make or break a good decision.
“The big mistakes are made in the financing office,” explains Phil Reed, the senior consumer advice editor at Edmunds.com, a leading auto research website. “Making the right decisions can save thousands over the life of the loan.”
One of the best options for getting an auto loan, according to a report on car dealer financing from the Center for Responsible Lending, is through a financial institution, preferably the one that you do your personal banking with.
There are more advantages to seeking a loan through your financial institution than going through a dealership. Here’s why it may work in your favor:
You can get pre-approved early – Getting a loan through your financial institution means that you can apply for a loan before you visit a car dealership, and that way, you’ll know how much you can actually afford to pay before going car shopping. In turn, you’ll eliminate any potential embarrassing moments at the dealership, such as getting declined for financing or approved for a smaller amount than you thought you would be.
You’ll get the best loan rate – By knowing your financing rate and terms, you also have more of an upper hand when negotiating the final price of the car, whereas dealers don’t have to give you the best loan possible.
“Most consumers aren’t aware that dealers can mark up rates without their consent and often don’t know what the interest rate is on their car loan. Dealer finance staff members may tell buyers the rate quoted is ‘the rate that is available,’ rather than the ‘best rate they qualify for,’ to avoid legal challenges over deceptive practices,” notes a New York Times blog. According to the Center for Responsible Lending report, consumers who presumed that their dealer gave them the “best” loan possible actually paid rates 1.9 percent to 2.1 percent points higher than others in a similar credit rank.
You’ll obtain a lower interest rate – Your financial institution may be able to negotiate a lower interest rate for you. And that means you’ll have lower monthly payments or even a shorter loan term, thus you’ll save money and ultimately pay less for the car. If you go through a dealer, you may think you’re saving money, but they could easily burn you with a high interest rate.
“You might think you’ve negotiated the best price on a new car or truck, but the dealer could cost you hundreds or thousands of dollars extra by offering an auto loan with an interest rate that’s much higher than you could have won on your own,” says Interest.com.
It’s more convenient – If you’re financing your car through your usual financial institution and you have an open banking account there, you may be able to add your loan to that account, which will make it easier to make payments simply by logging onto your account that you already have.
Ready to get an auto loan from your financial institution? Stop by or give us a call today to see what we can offer you.Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.