Is it cheaper to buy a car with a loan from a bank or the dealer?

If you have been searching for car loans for a new or a used car, there are two main options available for you. You can either secure the finance directly from the car dealer or you can take the loan from a bank.

Both of these options have their own pros and cons and so it would be important for you to consider them while selecting the right financing option for your need.

What do dealers offer?

Purchasing a car and getting it financed directly from the dealer would be the most convenient option and one which is also the most popular. However, you should remember that this is definitely not the cheapest possible option.

Dealers are known for higher interest rates that they charge because of the convenience that they offer to their clients. If you take some time to research and compare the car loan options online you will find that there are several lower interest car loans that are easily available today in the market.

What do banks offer?

Banks and finance companies that offer car loans offer several great options. Banks normally charge lower interest rates for their car loans in comparison to the dealers so you would definitely be saving a considerable amount of money.

Most banks will also offer you secured loan option. With a secured loan, the risk of the bank is lower, which is one of the main reasons why they can afford to charge low interest rates. If cost is the main concern for you then banks are definitely the right choice for a car loan.

Banks also normally have more than one car loan products so that you can select one that is most suitable for you. Depending on your income, the car that you are purchasing and the term that you select, you would be able to get an installment that would be affordable for you.

On the other hand, arranging for a car loan through a bank and researching for all the options available is time consuming and not exactly convenient. Banks and dealers both have their own advantages and disadvantages, as discussed above, and you will have to consider them before you select any option.