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What are the pros and cons of getting financing from a dealership?
I'm a first-time car buyer. I've been told that getting a loan at the dealership is easy, but dealers only offer loans where they make the most money. I'm not sure what to do. What are the pros and cons of dealer financing?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“While you’ll need to come to your own conclusion about financing, there are some common pros and cons of financing with a dealership.
Pros:
- Takes the legwork out of finding a loan
- May have attractive promo rates
- Works with many lenders to find you the best rate
Cons:
- May have higher rates than direct lending
- High-pressure loan practices
- Hidden fees due to kickbacks and commissions from a lender to the dealer
While it’s important to know the pros and cons of financing with a dealer, you won’t know your options until you look into multiple lenders. Just how you would shop around for
car insurance
or home insurance, you should shop around for your car loan
. When you’re ready to buy a car, remember to shop for car insurance before signing for the loan. Most lenders require full coverage.
Full coverage can be pricey, especially if you use the lender’s insurance, but you can save money by comparing rates.
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