Should I Finance With A Dealer or Bank?

You’ve found your dream car. After going to Woody Anderson Ford to test-drive it, you know it’s the next vehicle you want to purchase. So the question remains: how do you pay for it? You likely won’t pay for your car outright unless you’re independently wealthy or have an insurance settlement. That means that you’ll have to finance your new vehicle.

Banks and dealerships are your primary vehicle financing options. Keep reading for a complete guide to whether you should finance with a dealership or a bank and the pros and cons of each.

Financing Your Vehicle

Most people finance their vehicle purchases, whether they’re buying a new or used car. That’s because a majority of people either can’t or would prefer not to pay cash for their car. So to drive away in the vehicle of your dreams, you’ll need to finance it. Whether you finance your vehicle through the bank or the dealership depends on a few factors. Ultimately, the decision is up to you and will hinge on your needs and desires.

Financing Through a Bank

When financing your vehicle purchase through a bank, you go directly to that bank or credit union to secure a loan. Through this process, you can get preapproved for a loan before you go to a dealership, so you don’t have to worry about approval once you find your dream car. If you’re unsure which car you want to buy, you can still get preapproval from a bank, but some lenders may require you to provide this vehicle information before they approve you for a loan.

Although preapproval can expedite the vehicle purchase process, you’ll have to navigate the financing process independently. In addition, going directly to a bank means you won’t be shopping around for the lowest rate possible. Also, some lenders may require you to purchase a vehicle from a dealer in their network, which limits your choices.

Financing Through a Dealership

Financing a vehicle purchase through a dealership is similar to bank financing, except the dealer works with you throughout the process. Once you’ve selected your desired car, the dealer helps you complete a credit application, which it then submits to multiple lenders. This process allows you to compare rates and terms to determine the best option for your specific situation and needs.

By financing through a dealership, you simplify the process and save considerable time compared with financing through a bank. A dealership also gives you more flexibility, as you don’t need to worry about being in a lender’s network or wondering if a different bank could give you a better interest rate. Likewise, dealerships have more options for bad credit financing. For example, at Woody Anderson Ford, we work with car buyers of all credit levels.

Prepare Your Finances

Regardless of whether you choose to finance your vehicle through a bank or a dealership, there are specific steps you should take to solidify your finances before making your purchase. First, you’ll want to set your budget. You should know exactly how much you can afford and how much you can expect to pay based on your financial history and desired vehicle.

See how much you can expect to pay using our payment calculator. Adjust the vehicle price, interest rate, loan term, and trade-in value to determine how much you’d pay monthly based on these variables.

Second, check your credit report. Your credit score is one of the most significant factors the bank or dealership uses to calculate your interest rate. The interest rate determines how much you’ll spend on your monthly payments and how much you’ll pay over the loan’s life. The better your credit score and credit history, the better interest rates your bank or dealership will offer.

If your credit score is low, there are specific steps you can and should take before applying for financing; for example, building a credit profile by opening a credit card or credit-builder loan and making payments consistently on time. You’ll also want to catch up on past-due accounts and pay down any revolving account balances.

Lastly, you’ll want to save up for a down payment on your next vehicle. The greater your down payment, the less you’ll need from a loan, and the less you’ll pay in interest over the life of that loan. Likewise, the more you offer for a down payment, the lower your interest rate will likely be. Generally, financial experts recommend that you strive to provide at least 20% of a new car’s purchase price or 10% for a used vehicle.

Trade In Your Current Vehicle

Another critical step in your car financing process is to trade in or sell your current vehicle. Luckily, you can also trade in your car at Woody Anderson Ford. In fact, you can get an instant appraisal and offer right now through our trade-in calculator powered by Accu-Trade. Once your offer is approved, you simply drop your vehicle off with us when you buy or lease your new car.

The Woody Anderson Ford Finance Center

As a comprehensive dealership, we at Woody Anderson Ford pride ourselves on helping you throughout your vehicle’s life. From purchasing to servicing your vehicle, our experts can ensure that you get the most out of your car for as long as possible. Our staff at the Woody Anderson Ford finance center has worked with customers across Alabama, ensuring that they get the right loan or lease for their situation with the most competitive rates. Apply for financing today.

Finance Your Next Vehicle at Woody Anderson Ford in North Alabama

If you have your sights set on a new Ford or any of our high-quality used vehicles, stop by Woody Anderson Ford in North Alabama today. Our team of friendly professionals is here to make your car-buying or leasing process as simple and hassle-free as possible. From choosing the best vehicle for you to getting you the best financing options, Woody Anderson Ford has you covered.

Contact us online, call 256-539-9441, or visit us at 2500 Jordan Lane N.W., Huntsville, Alabama 35810.

white and black board by Kelly Sikkema is licensed with Unsplash License