You can
get finance from your dealer or go to outside parties like banks for
third party finance. Both the options have their plus and minus points
as explained below. Dealer finance comes with very attractive annual
interest rates. It could be as much as half the rates quoted outside.
There may not be a manufacturer's rebate that significantly lowers the
principal amount to be charged. If the down payment is more, you may
get a good deal compared to outside sources.
A dealer
may contact outside parties who would actually provide the finance,
and the dealer may even get a 'cut' on that by increasing the rate.
Dealers act as middlemen for the auto finance industry, and this is
a very old practice.
A credit
union does not allow this practice, as they pay a fixed fee to the dealer
for bringing in a customer for loan. If you are thinking of a very low
rate of interest than you must have a very good credit report to show.
Or else
do some home work, find out all the alternatives, and then approach
a dealer. Use online help to get lowest rates and know all their terms.
Make sure you have a copy of your latest credit report without any errors
on it.
Often banks
and credit institutions put a limit on how many points the dealer may
raise the interest rate by. Some however do not.
Bank financing
comes with a higher interest rate. You can get a manufacturer's
rebate, about as much as your down payment that significantly
lowers your principal amount. If the rates are competitive,
outside finance may come at lower monthly installments than
dealer finance.
