If you are attempting to gain approval for an auto loan, you should skip the dealership and opt to work directly with a bank. There are many benefits of bank auto loans.
Bank Auto Loans
Throughout history, most individuals seeking to purchase a new or pre-used vehicle have obtained financing as arranged through the vehicle dealership.
Simply put, the dealership that owns the vehicle in which you have an interest collects all relevant information about you and then forwards those details to lenders that specialize in loaning money for vehicles. It is a third-party process, if you will.
If you get bank auto loan, you bypass the proverbial “middle man” and apply directly with that financial institution.
A bank has the direct capability of pre-approving an auto loan. The bank is considered to be the “lender” of the loan.
They will take information about you – such as your credit score, your employment history, your earnings, your expenses, the type of vehicle that you are interested, as well as the terms associated with that particular transaction – and will determine if you are approved for a loan. If you are considered to be an ideal candidate, the bank will outline how much credit they are willing to extend to you, the interest on the loan, as well as the term of the loan.
When working with a bank to get an auto loan, you will find that the financial institution is willing to negotiate terms. This should be done prior to confirming the conditional commitment of the loan, but, may be done after the initial quote.
The bank will allow you to negotiate on the interest of the loan, the term of the auto loan, and even the payments you will be responsible for on the loan. In most instances, dealership financing does not offer this level of flexibility.
In fact, most dealership-approved loans offer absolutely no level of negotiating.
Once you and a bank have reached an agreement on the terms of the auto loan, you should then receive a conditional commitment letter before leaving to go back to the dealership where the vehicle that you want is located.
The letter will include the quote that the bank provided to you as well as negotiable terms. Even if you have no credit or poor credit, it is advised that you opt for a bank loan and not a dealership loan. This is because of the fact that you will likely have to pay back a lot more in interest through dealerships that offer “buy here, pay here” loans for those that require such a convenience.
There are many advantages to obtaining an auto loan through a bank. You will get better terms. You will pay less interest.
If you are a member of the bank, you are likely to get more discounts. For example, right now at Somerville National Bank, you may get up to a 66-month term on your auto loan. Plus, you can get a 0.25% rate reduction if you opt for your payments to be taken out directly from your account.