Firstly, there are three ways to finance a car. You can pay cash for it, or finance it through your dealership or bank. Depending on the price, few people are willing to write a check for several thousand dollars for their car purchase. Therefore, most people opt for auto financing.
The Advantages of Financing Your Car Through the Dealership All dealerships offer financing to their customers when purchasing a car. This helps simplify the buying process and settle everything in one place. But that's not all, discover the other advantages.
Interest Rate
Some offer very low interest rates, or even zero when buying a new car, or low interest rates on used cars. Yes, it is possible to get rates of less than 0.9% interest with a dealership when the vehicle is certified. With such a low interest rate, it is often much more advantageous than a personal loan from a bank. Also, the fact that the vehicle is certified provides a guarantee of quality, as well as an additional warranty.
However, it's important to note that dealership auto financing is considered an "installment sale." This means that the lender remains the owner of the car until it is paid off in full. Also, you will need to seek permission if you wish to sell your vehicle. Conversely, this will not be the case for an auto loan from the bank.
Second Chances for Credit
Dealerships collaborate with all financial institutions, whereas your bank may simply refuse or offer you a too high-interest rate. If your credit is not so good or your financial situation is not at its best, the dealership will offer you personalized options to improve your credit. Indeed, when you are accepted for a second chance, the interest rate is higher, but this loan is an effective solution allowing the owner to rebuild their credit and improve their score in the long run. Often, after 18 months, the owner who has made payments without delay can access a lower interest rate.
It is also advisable not to spread the repayment of debt over several years, as you will end up paying much more in interest. Rather than asking for the monthly amount, ask for the amount you will have paid in the end versus the selling price of the vehicle.
Finally, it is necessary to compare the rates offered by your dealership for certified used cars with the rates of auto loans or lines of credit offered by your bank. You might be accepted by one and rejected by the other. For more information or advice on financing a used car, contact us today at Occasion Beaucage!
