Where to Go for Auto Financing

Ready to buy a car? That’s great. But how will you pay for it? If you don’t have enough money (or a rich uncle) to pay cash for a car, you’ll need to get an auto loan. As a buyer, you have several options. You can get a loan from a financial institution like a credit union or bank. You can also get financing through a car dealer.

No matter where you get your loan, it’s important to work with a reputable lender. If you don’t already have a relationship with a lender, look at online customer reviews and check with your local Better Business Bureau or Chamber of Commerce to see if there are complaints against the lender. You could be paying off your loan for five or more years, so you’ll want to work with a lender you trust.

Dealer vs. Private Lender

When deciding whether to finance a car purchase through a dealership or a private lender, such as your credit union or bank, consider these pros and cons:

Considerations Dealer Financial Institutions
Offers competitive interest rates Depends on credit score Yes, especially if your credit score is good
Willing to negotiate interest rates Sometimes Sometimes
Makes a commission off of car loans Yes No
Adds fees to car loans in order to make a profit Yes Depends on the financial institution, though Navy Federal doesn’t
Can offer loan pre-approval Generally no; some may if they've partnered with a financial institution
Benefits of Pre-approval

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