Financing a car through a bank is often better than a dealership because you essentially cut out the middleman, which can lead to lower interest rates. You can then apply the cash rebate to the down payment or pocket the money. However, in some cases, financing through the dealer may be advantageous, especially if you can get a 0 percent APR and have a down payment already saved. And, if you definitely plan to finance with the dealer, taking the low interest rate is usually your best bet in the long run.
Regardless of what you decide, it’s a good idea to check interest rates with another lender and walk into the dealership preapproved for an auto loan. That way, you’re not stuck with the dealer’s terms. Additionally, if the dealership finance office knows you have another loan lined up, it may offer you a better deal. If the loans are similar enough, some people may find the convenience of dealership financing is worth paying a little more in interest.
Buying a car is a major purchase. If something about the process makes you uneasy, it’s best to trust your intuition and look for a better deal. The right car is the one that safely gets you where you need to go, without breaking the bank.