Buying a car can be an expensive process, particularly if you're buying a new car. A financing loan may be your best option for getting the car you want. You can choose among several financing options, all of which have advantages and disadvantages.
Getting a car loan from a car dealer may seem like an option likely to cost you a lot of money. However, according to "Bankrate.com" there is a value in asking the car dealer to get you an auto loan. If you have a poor credit rating, or only a small amount of capital to commit to buying a car,a car dealer often can prove to be a better option than a bank or other lending agency. Since a car dealer in effect buys all his cars on credit each month, he has a great deal of leverage with the bank, which he effectively extends to you when you take a loan out with him. Although he will most likely add a cut for himself in the interest, he will be the one who most wants to sell the car, so he will often offer more favorable rates than you might expect.
The benefit of using a bank is that it is not interested in the car, only in your suitability as a candidate for a loan. Borrowing directly from a bank also cuts out the middleman, and you will pay interest only to the bank, ultimately bringing the cost down. According to "Get Smarter About Money" many dealer-financed loans are in fact bank loans anyway. This means you might find a better deal simply by shopping around. Moreover, a bank is a far more secure institution to gain a loan from than a car dealer. Banks are heavily regulated in their lending practices, something not necessarily true of car dealers.
The benefit of using the Internet to shop for an auto loan is simply your range of choice. Using search engines, you can quickly and efficiently find a low-interest loan suited to your circumstances. The downside to this is less security, and your poor credit rating may lead to the loan being spread over several years. However, if you are unable to get a loan from an auto dealer or a bank, the Internet will provide you with a range of options, which you should consider carefully before taking. Discussing options with a financial adviser will help you make a good decision.
