Do Car Dealerships Offer Financing?

do-car-dealerships-offer-financing checking on a car

Of course, most car dealerships offer financing, if not all. However, this is a very tricky process, and lots of considerations to think through first. That is what this post is all about.

All in all, buying a car is not a walk in the park. Besides thinking about the money, you also have to scroll through inventory pages and spend many hours checking cars and dealership after dealership. At the end of the day, nothing is more stressful than paying for a vehicle. If you’ve finally decided on getting financing, this is the post you need to read first.

After deciding, the next question you should ask yourself is how or where you are going to get your car financing? You may have recently passed by a car dealership and found a car – either new or used – that you want. Now, since you don’t have enough money yet to buy one in full, the next best thing to do is get an auto loan. Most car dealerships offer finance, but you can also go to the bank and ask for a car loan. A new set of decisions and confusions about car buying begins there.

This post will discuss how dealerships offer financing and the pros and cons of getting a loan from a dealership and from a bank.

How Does Financing at a Car Dealership Work?

First, we have to talk about what kind of financing dealerships offer to their customers. Dealer financing is a type of indirect loan that car dealerships provide to their customers. When a financing deal is closed, the dealership will then sell it to a bank or third-party financiers. For the financial institutions and banks to acquire profit, they will buy the loans at a discount and get the borrower’s interest and principal payments.

How Do Car Dealerships Benefit When They Offer Financing?

Car dealerships gain business when they offer financing to car buyers through their buy rate. Buy rate is the interest that banks and financiers proffer to the dealerships in exchange for the closed deal. This way, the car dealerships would be able to secure a sale faster than actually looking for potential buyers. The dealership will then relay the customer’s information to either the bank or a third-party financial institution, depending on which the car dealership is partnered with. It is up to the loan buyer to manage the deal from there.

This, however, might not be the case all the time. There are times when the car dealerships will finance your purchase themselves and not sell it to a third-party financing institution. This situation may be advantageous to the buyers. They can set the interest rate themselves and give you more extended terms. Though, there are times that car dealerships are going to set the rate a bit higher than the average interest rates. That’s why it’s essential to check the terms first and check as many loan term options as you can before getting a loan.

So how do these benefit car buyers?

When car dealerships offer buyers financing, be aware that the interest rate can be slightly higher than the usual rates banks and car loan companies offer. However, what you’re buying here is time since getting a loan on your own can take time, and a whole lot of effort. If you’re planning to buy a car, but your credit is a bit lackluster, then you have more chances of getting a car loan through a dealership. It is quite a risky business for car dealerships, especially when providing financial loans to high-risk creditors. To solve this, dealerships may install devices in the vehicle that will automatically disable the vehicle if the payment is not received on time.

Factors to Consider

Lastly, here are some factors to consider since getting financing from car dealerships is quite tempting. When you’re going for a car dealership’s financing, you have two options. There’s the long term and the short term. Long term loan means that you’re going to pay a monthly loan for an extended period of time. On the other hand, the short term is paying for a shorter period. When you go for the long term, you may pay lower monthly rates. However, you may be losing more money in the long run rather than going for a shorter period. Most car dealerships provide terms between 36 and 72 months.

When it comes to the downpayment, you may want to pay more upfront. You may lose a big chunk of your savings, but it can help you save more money in the loan’s whole duration. Paying a smaller downpayment may save you some money at the start. However, you may end up losing a lot of money with a more significant interest rate.

do-car-dealerships-offer-financing getting a bank loan

Financing Offer From Car Dealerships Or Getting A Bank Loan? What Are The Pros And Cons

When looking for a car loan, you may encounter car dealerships offer financing. At the same time, some banks lure potential buyers in for their own car financing programs. To keep you from indecision, here are the pros and cons. Use this information to weigh down your options.

Pros Of Getting A Car Bank Loan

You’re Getting The Money From The Source. One thing people are scared about when getting a loan is when there is a middleman involved. When you get a loan from a car dealership, the dealership becomes the middleman; therefore, you are getting extra fees. When you get it from a bank, you will not have many expenses, but you may also get lower rates than when getting one from a car salesman.

There’s The Added Convenience. Although we mentioned that getting a car loan from a dealership provides convenience, you can also get convenience when you get a bank loan. Banks are virtually everywhere. There are always banking institutions near you, so it would be much easier to approach one.

You’ll Get Better Credit Score. When you get a car loan from a bank or a loaning company, and you prove yourself to be a good payer, the chances of you securing a better interest rate is high. You would also be able to establish a better relationship and, as a result, you’d get better offers in the future. If you have made friends with someone who works there, you may be able to secure a loan in the future even if your credit score is pretty bad.


It’s Complicated. Although a good percentage of people can get a loan through a bank, the process of getting one for a car can be a little more complicated and time-consuming. For one, they will still have to check on your credit history, while some may have to do a background check. Not only that, but they will also have to ask for a load of requirements from you. Lastly, there’s a chance that you won’t get approved.

No Negotiations. Once the bank gives you the Annual Percentage Rate – or the interest rate – then that’s that. You can’t negotiate on it; it’s either take it or leave it.

Pros Of Getting A Financing From Car Dealerships

Fewer Requirements. When you get an in-house financial loan from a car dealership, there will be fewer questions and requirements. One of the only few requirements they need is your credit score. As long as the dealership finds you to be able to pay, you’re one step closer to owning your car.

Come In As A Buyer, Get Out As A Car Owner. Car dealerships make it easier for customers to take only a day to finish all the processes of acquiring a car loan. Indeed, the car dealership has become a one-stop-shop.


Higher Interest Rates. As mentioned, when you go for financing offered by car dealerships, your interest is higher than those provided by the bank. The difference may be small, though.

Too Many Options. When you go to a dealership, especially a huge one, you will have many options to decide on. You may even end up getting a vehicle that doesn’t really suit you and your lifestyle. Be sure to really check each car you’re eyeing to buy, and don’t forget to ask assistance from your salesman and ask a lot of questions before deciding.

In Conclusion

Yes, car dealerships offer financing to customers who do not want to buy a vehicle in cash. However, you need to weight out your options first, and check out banks if they offer similar loans, too.

Check out out listings with different car brands coming from our partner dealerships by clicking on the link. Most of our partner dealerships offer financing as well, so don’t hesitate to contact them.

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