There are many different financing options available to car buyers. One option that is sometimes available is in-house auto financing through the dealership. In this type of financing, the dealership provides the loan for purchasing the vehicle, and the buyer makes payments directly to the dealership.
There are both pros and cons to in-house auto financing. Let’s talk about them and help you decide if this type of financing is right for you.
Related Post: Buying A Used Car? Here Are Your Options
First off, the pros:
1. One-stop shopping
You can do everything in one place when you finance your vehicle through the dealership. This can be very convenient, especially if you are short on time.
That’s important because buying used cars in el Cajon can be very time-consuming. So if you’re able to do everything in one place, it can save you a lot of time and hassle.
2. You may get a better interest rate
If you have good credit, the dealership may offer you a lower interest rate than you could get from a bank or credit union. This can save you money over the life of the loan.
Sometimes, the dealership will offer promotional financing rates that are even lower than their standard rates. However, these promotional rates can be a great deal, so it’s worth asking about them.
3. The dealership may be more flexible
When you finance through the dealership, they may be more flexible in terms of the length of the loan and the monthly payment amount. This can be helpful if you need to keep your payments low for budgeting purposes.
4. You may be able to negotiate
In some cases, you may be able to negotiate the price of the vehicle and the terms of the loan when you finance through the dealership. This can be a great way to get a better deal on your purchase.
Now, let’s talk about the cons:
1. You may not get the best interest rate
If you have poor credit, the dealership may charge you a higher interest rate than you could get from a bank or credit union. This can cost you money over the life of the loan.
2. Sometimes, the payments are due weekly
Some dealerships require that you make your payments on a weekly basis. This can be difficult to budget for and can make it easy to fall behind on your payments.
3. You may have to get insurance through the dealership
It’s not unheard of for dealerships to require that you get your auto insurance through them. This can be costly and may not be the best coverage for you.
Also, if you have an accident, the repairs may have to be made at the dealership, which can be more expensive than going to a reputable repair shop.
4. If you miss a payment, the dealership can repo your car
If you finance through the dealership and you miss a payment, they can repossess your car. This can be very stressful and can damage your credit score.
So, those are the pros and cons of in-house auto financing. As you can see, there are some good and bad things to consider.
Ultimately, whether or not this type of financing is right for you will depend on your circumstances. If you have good credit, it may be a good option for you.
But if you have poor credit, you may be better off going with a different type of financing. Talk to your bank or credit union to see what they can offer you.