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Is It Better To Finance a Car Through a Bank or Dealership?

By April 17, 2020 July 16th, 2020 No Comments

Is It Better To Finance a Car Through a Bank or Dealership?

Buying a car from a dealership is one of the biggest purchases a person can make. While it can get confusing reading about auto finance rates, the truth is that the right lender will make the entire process simpler to understand. This begs the question: is it better to go to a bank or a car dealership for approved finance options? Your decision can drastically impact how much money you ultimately spend on the car. Honestly, your best option may be to go to a credit union like American United Federal Credit Union.

 

Credit Unions Usually Have Lower Rates on Auto Loans

For the most part, you can typically get lower rates on an auto loan at a credit union compared to a bank. For proof on this, look no further than a 2017 report from the National Credit Union Association. When paying off a new car over the course of 60 months, credit unions had an average loan rate of 2.78%. For the same car during the same length of time, the average loan rate was 4.69%.

As an example, say you want to take out a loan for a new car that costs $20,000. Taking into account the average loan rate at a credit union, you would pay $357 every month for 60 months. If you got a loan for the same car at a bank, then you would pay around $375. You end up saving $18 a month, which translates to saving $216 a year. The car is exactly the same in both scenarios, but you end up saving hundreds of dollars in the long run by going to the credit union.

 

Credit Unions Are More Flexible When It Comes to Credit Problems

Another advantage you get at credit unions is that they tend to be more flexible. Everyone has made mistakes in their past, and some financial mistakes can end up taking a toll on your credit score. Banks and dealerships may not be willing to work with you at all if your score is too low.

However, credit unions have a bit more flexibility. This is due to the fact that credit unions are more dedicated to helping out the local community. They look at the particulars of your situation and make a decision based on the details. Banks will typically deny your application if there is any problem. Even if a bank would give you a loan, the loan rate would likely be outrageous.

 

Credit Unions Are Customer-Owned

Banks are beholden to shareholders and stock investors. The same cannot be said of credit unions. These are non-profit organizations, which means the endgame is not to turn a profit. The goal of any credit union is to help depositors to the best of their abilities.

When you open an account at a bank, you become a customer. When you open an account at a credit union, you become part-owner at the organization. Therefore, institutions like American United Federal Credit Union are more likely to work with you and give you as many benefits as possible.

When you go to buy a car, the person selling it to you will probably make you think your only options for financing is to work directly with the dealership or go to a bank. However, there is a third option you need to seriously consider.

American United Federal Credit Union is here to help people around West Jordan, Utah, to secure the financing necessary to buy a car. We can also help with refinancing vehicle loans and securing a great credit card. Contact us immediately if you have any questions about our services. We are here to help you.

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