Auto Financing Options
When comes to financing your vehicle, you have two options: working with a direct lender or getting financing through the dealership. The experts at PrimeLoans can help you determine which of these core auto financing options will work best for your individual situation.
Shop Around By Choosing Direct Lending
Direct lending means getting a car loans directly from a bank, credit union, or other finance company. You agree to pay, over a period of time, the amount financed and a finance charge. Once you sign a financing contract with a dealership to purchase a vehicle, you can use the car loan from the lender to pay for the car you chose.
An advantage of direct lending is that you can shop around for a car loan in several places. This gives you the opportunity to find a loan that you are not only comfortable with, but that also completely fills your financial needs. Furthermore, when working with a direct lender you will find out your credit score and therefore you will be better prepared before walking into a dealership.
Enjoy More Convenience By Financing with Your Dealership
Dealership financing is straightforward—you get your car loan from the dealership. The dealer, once aware of your financial situation, offers you a car loan that best fits your needs. Some dealerships might not be able to suit your financial needs, but don’t be discouraged. Other dealerships, more eager for your business, might find a great car loan deal for you. Once you sign the contract, the dealership may choose to sell it to a financial institution.
Many shoppers choose to finance through their dealership because it is convenient to have both your car and car loan lender under one roof. In addition, dealerships usually have multiple financial institutions fighting for exclusivity with them, so they will have multiple car loan options that fit your needs. They also have plenty of manufacturer-based incentives.
How Your Credit Rating Affects Your Financing Options
Whether you choose to work with a direct lender or a dealership, your credit rating plays an immense role in your financing options. Before you finance a vehicle, you must be fully aware of your financial situation to ensure that your income can cover your monthly living expenses plus new car payments. If you are looking into auto loans, keep in mind that the total amount you pay will depend on several criteria, such as the final price that you negotiated, the APR (annual percentage rate), and the length of your contract.
Let’s talk about what negative equity means when it comes to your auto financing options. If you owe more on your car than its calculated market value, then you have negative equity in that car. Keep this in mind when you’re planning to use your current vehicle as a trade in on your car purchase.
Having positive equity in your car means that its market value is higher than what you owe. Long car loan contracts make it very hard to reach positive equity on your vehicle, but don’t give up just yet. The dealer might cut you a deal where your car loan includes paying off your old car. In that case, you must also attempt to pay off whatever you owe on your current vehicle before signing a new contract since negative equity can impact your credit rating.
Contact us to start exploring your auto financing options with help from our experts. We are proud to serve clients nationwide.