555-555-5555
mymail@mailservice.com
Bank Car Loan vs. Dealer Financing: Key Differences
Do you have a car buyer looking into financing options? First of all, congratulations! If you've gotten to this point, it means your sales team's hard work is paying off. However, many soon-to-be buyers have a lot of questions when it comes to choosing a bank car loan versus dealer financing.
Some potential buyers are fortunate enough to pay for a car, truck, or SUV in one giant cash payment. For the most part, though, there’s the complex process of getting a loan, making monthly payments, and paying off the vehicle over time. In this article, our team at 1803 Capital LLC will look at some of the key differences between bank car loans and dealer financing to help you guide your customers confidently.
3 Differences Between Bank Car Loans and Dealer Financing
Bank car loans differ from dealer financing in several ways. A few buyers may prefer bank car loans, but the majority would rather go with dealer financing. It’s critical to walk your customers through their auto financing options and help determine the best way to pay for their new set of wheels.
Interest Rates
The first difference between bank car loans versus dealer financing involves interest rates. Banks typically offer various loan options and interest rates to meet every customer’s needs and budget. However, customers likely won’t be able to negotiate interest rates and could end up with higher rates, depending on the type of loan.
On the other hand, you have dealerships. Many dealerships offer financing options with negotiable interest rates through a trusted, secure lending partner. This allows your prospective buyers to get the deal that meets their needs while boosting your business.
Customer Service
Another key difference between dealer financing and bank auto loans has to do with customer service. Banks come in all shapes and sizes, from local unions to a nationwide network. National banks probably have a location near your dealership, making it convenient for customers to set up a loan. However, relationships with national banks might feel impersonal and not very customer oriented.
Then there are dealerships. A good dealer will prioritize customer relations and satisfaction to ensure that every customer gets the car they want with the best possible experience. Buyers can enjoy a more personalized experience and handle the entire loan process in one place.
In terms of customer service practices, you should provide a comprehensive list of your dealership's lending partners. This helps demonstrate transparency and establish trust, as you show the customer their loan options upfront. It can also avoid any confusion and frustration down the line.
Credit Score Requirements
Bank car loans versus dealer financing — does it make any difference which one your customers choose? When it comes to credit history, the answer is a resounding yes. Many banks don't even offer car loans for those with poor credit scores.
Dealership car loans, however, may offer financing options regardless of your customer's credit score. They could still buy a new car with little to no credit through dealer financing. In addition, the loan terms and asking price are often negotiable so that everyone can benefit.
Which Is Better: Bank Car Loans or Dealer Financing?
Choosing between bank car loans and dealer financing isn’t as simple as drawing a name from a hat. You should remind customers to carefully review their options and read the fine print to avoid silly mistakes that could prove costly in the future. The best choice will depend on factors such as the following:
- How much they want to spend
- How soon they can pay off the vehicle
- How important customer service is to them
- How high or low their credit scores are
Bank car loan versus dealer financing — which is right for your customers? At 1803 Capital LLC, we’re here to answer your questions and help buyers finance a vehicle through your auto dealership. Learn about financing for car dealers, or call us at (504) 754-9176 to get started today!
