You can arrange a car loan at the dealership when you buy, or go to a bank or credit union yourself. Either way the lender is often a bank or finance company. The difference is who arranges it and when.
| Through the dealer | Directly from a bank or credit union | |
|---|---|---|
| How it works | The dealer sends your application to one or more lenders it works with. | You apply to the lender yourself. |
| Convenience | Vehicle and financing arranged in one place. | A separate step, which you can do before shopping. |
| Offers | Manufacturer promotions on new vehicles are usually available only this way. | You may get member or existing-customer pricing. |
| Negotiation | Price, trade-in and financing are discussed together. | You know your loan terms before you discuss the price. |
| Private sales | Not applicable. | Possible with lenders that finance private purchases. |
Pre-approval
Some lenders will tell you in advance how much they would lend and on what terms, subject to conditions. A pre-approval is not a final approval, but it gives you a figure to compare with what a dealer offers.
Comparing the two
- Ask each for the APR, the term, the payment and the total cost of borrowing.
- Compare for the same amount and term.
- Check for added products or fees in the dealer’s figures.
- Ask about early repayment on both.