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Should you get a car loan from the dealership or from your bank?

Should you get a car loan from the dealership or from your bank?

Car loans are serious business. They are a long term commitment that will take a big chunk of your monthly outgoings for up to five years. Getting the right car loan for your needs is paramount. So which is best, getting a car loan from the dealership or from your bank?

As a car dealership chain, you would expect us to say we are the best option. However, Car Nation Canada is dedicated to delivering exceptional service and will always be honest about your options, even if it means we lose a little business.

Dealership loan or bank loan?

The answer to the question is there is no ‘best’ option here. Like many areas of car loans and purchasing, there is often no best option. There is only the option that works best for your particular circumstances. What is right for me may not be right for you and vice versa. This is one of those times.

Car loans from a bank

Getting a car loan from the bank usually means a pre-approval with a letter of intent from the bank to show the dealer. You can often get decent interest rates from your bank and as they should know your history, they will often be very competitive in those rates.

The downside with car loans from a bank is that pre-approval is a ‘best guess’. It is not a firm offer of a loan and the rate you get may not reflect that initial offer. The upside is that once pre-approved, you can visit any dealership anywhere and get a new car.

Car loans from a dealership

Getting a car loan from a dealership involves a very similar process to a bank, only the salesperson does the work. Where it differs is that you would usually apply for a loan after finding a car. You fill out a credit application and the dealer will send it to a range of lenders. Some dealers have their own financing options too. You then pick the best rate or best deal for your needs.

The downside is that the process can take a while. You also need to choose your car before applying for credit, which can cause you to overspend or buy a more expensive car than you initially wanted. The upside is that many dealers offer very low rates, even 0% on some cars in order to secure your business.

To get the ‘best’ car loan, it pays to do your research. Know what options are open to you, get a pre-approval from your bank anyway so you know how much you could borrow. Then use that to work with the dealer or secure your loan directly. Just be aware that applying for loans will result in a hard inquiry. Pre-approvals do not.

Car Nation Canada have car loan options to suit every situation. Try us and see what we can do for you!

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