Should I Finance My Car Through a Credit Union or the Dealership?

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If you are deciding on buying a new car, you have probably considered whether it is better to use dealer financing or finance through a bank or credit union. When deciding to purchase a new vehicle, choosing the best finance option can help you get the most value for your money. It also can ensure that you get the best loan terms you can. Here are things to consider when choosing auto financing. 

Dealership Auto Financing

When looking to obtain financing through the dealership, you will complete an application through the dealership. The dealership then attempts to finance you through a number of their own approved lenders. Sometimes referred to as dealer-arranged financing, this is a popular way to purchase a car. The pros of this are that there are a number of lenders, so it may be easier to negotiate terms based on differences in lender criteria. Dealerships also sometimes provide incentives and deals to shoppers who are approved through preferred lenders. Keep in mind that these kinds of finance options could have higher interest rates and longer loan terms.

Credit Union Auto Financing

Another option for financing a vehicle purchase is to apply for an auto loan through a financial institution such as a bank or credit union. This is similar to financing through the dealership where your loan rates are determined on a number of factors such as creditworthiness, income, and payment history. With this loan, the financial institution will quote you an interest rate, loan term (number of months), and a maximum loan amount, you can then shop for a car at any dealership or sometimes a private seller. The pros of this kind of purchase option are that you can negotiate with the dealer on the price of the vehicle and any other extra’s you want to include in the purchase. These kinds of loans usually also have better loan terms and interest rates. However, most require a good credit history.  

Buying a car is a huge decision, especially because it impacts your money. Always be sure to examine the terms of all offers thoroughly to ensure you are agreeing to the best offer for your situation. For questions about Camino Federal Union car loan offers, qualifications, contact one of our qualified Member Advisors who can help.