PART 1:   GETTING A CAR LOAN FROM THE BANK VS. THE CAR DEALER.   WHO HAS THE BETTER DEAL?

This is a good question that I get often when clients are looking to finance a new car purchase.  Let’s start by saying that all Banks dislike car loans, because the loan request is on a depreciating asset, and it doesn’t make for good customer conversations since the rates they are mandated to give are too high. When you ask your banker for a car loan, you will probably be offered a loan at 7% to 8.5%, sometimes even higher based on your credit and relationship with the bank.  It is probably better to apply for a line of credit, often at a lower rate, in order to purchase a new or used vehicle.  The line of credit can be setup to have a regular monthly payment similar to a car loan, however once it is paid off, you can then use it again for something else, up to the approved limit.  The best option is still going to be the Car Dealer.  Almost all popular Dealer Brands have negotiated special pricing with the Banks and Credit Unions.  The Dealers are able to always capture lower rate offers because of the volume of business provided to a lender.  They also have a totally different adjudication process for car lending and can often get deals approved that a traditional bank would turndown.   Next time we will look at the difference between “Financing” vs. “Leasing” – What is the Best Option!!   Talk again soon!