Bank vs. Dealership: How to Finance Your Car

Posted Wednesday, Mar 01, 2023

How to Finance Your Car

Are you looking to buy a new car? If you answered yes to this question, you might also be looking at car financing options. Most people are approached by car dealerships, which encourage them to apply for a loan at the same place. Is this the right choice?

When you buy that car for the first or second time, you might not know much about car loans. Regardless of being encouraged to visit a bank and apply for a loan, you might be better off approaching a car dealership.

Before settling on one option, consider the APR rates for both. If you can qualify for a bank loan, you might be better off applying for it and comparing the two options. Obtaining a bank loan is not a feasible option for everyone, particularly individuals who have bad credit or no credit history.

Comparing Car Financing Options: Bank vs Dealership

Picking the Bank

What’s so great about choosing car financing through a bank loan? Why do so many people apply for bank loans each year?

No-Nonsense Loans

Bank financing involves applying for a loan by visiting a bank or a credit union. You must visit the bank first, as a car dealership will ask for payment if you want to take the car home.

This payment is processed through an upfront payment and a preapproved loan in the form of a contract. This is a great idea since this piece of paper is an obvious budget for the car dealership, which can then show you, models, accordingly.


Bank loans can be just as convenient as car dealership financing. You can apply for that preapproved loan online and visit the lenders in person. However, you will have to submit documents providing information about the vehicle.

In case you aren’t sure, your final loan amount will be determined once you visit the dealership. This means your interest rate can be quite volatile. After those credit checks, you might even get an APR that is far above your budget. For people with bad credit, this isn’t favorable.

Another factor to consider is the inconvenience you will face when switching from the lender to the car dealership. You might be caught running between the two to fix a final amount. When exploring car financing at a dealership, everything happens in one place.

Choosing a Car Dealership for Car Financing

Choosing to go to a car dealership for car financing might serve you better in the long run. You get all the advantages of a bank with none of the inconvenience.

Car Financing Through a Car Dealership

Car dealerships finance loans for their customers through the same lenders you might have had to contact on your own. They do all the work and present the final options, allowing you to choose. This choice is beneficial for people who want to compare multiple options.

Car Financing at a Car Dealership

You can also visit or contact a buy here pay here dealership. These dealers provide in-house financing options that support those who cannot finance a car on their own or don’t qualify for bank loans due to bad credit.

If you cannot find a good option on your own, a buy here pay here dealer can show you many more alternatives. Remember that bad credit might lead to a higher APR, so look out for promotional financing or increase your down payment for lower rates.

Making the Choice

So, how are we supposed to make a choice? Considering both bank loans and car dealerships can help us finance a car, which one is the best?

1.  Step into Your Shoes

It is best to choose the option that works for your budget and restrictions. In some cases, it is impossible to qualify for a bank loan. Moreover, a bank loan might offer you an impossible APR.

2. Your Feet on Two Boats

If you don’t have bad credit and can still apply for a bank loan, we suggest applying to the bank before visiting a car dealership. You can always ask the dealer to help you with car financing and compare the quotes at the end to find the best option.

3. The Better of Two Evils

In case you have bad credit and are being offered a ridiculous APR rate by both the bank and the car dealership, it is best to pick the better of two evils. You don’t have to settle for high APRs if you can hold off on the car purchase for a while. However, if you are in a hurry, try to choose the least bad option.

Bonus Tip: Think Big!

If you are experiencing issues with your credit and can’t find the best car financing options, it is time you start to work on your credit history. The better your credit score, the more opportunities you can use.

Increasing your score can often be as simple as paying a few overdue bills. Analyze that score and figure out where you are taking the biggest hit. Try not to apply for any new credit cards during this period, as hard inquiries can impact your score.

If you can wait for a few weeks, it is possible to benefit from working on that credit score and improving it for better chances. Moreover, you can also save up more money and increase the down payment to get a better APR.

Remember, a high APR isn’t worth it. You don’t just need to buy the car but also care for its mileage. The monthly installments and your monthly expenses can add an unnecessary burden on your shoulders!

Final Thoughts

The easiest way to finance a car is to explore multiple options. But with bad credit, that might not be possible. In this instance, a car dealership can offer much better solutions.

You can choose in-house financing options or contact a car dealership and connect with some of the best lenders. Even with bad credit, it’s possible to easily finance that car!





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