Identifying Auto Loan Sources

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In need of an auto loan? If it is your first time financing an auto purchase, you probably don’t know where to get it. Aside from New York Auto Approval Center, there are many other sources of auto loans worth considering. Read on to identify your other choices.

 

Banking institutions: 

This is one of the most common sources of auto financing. One of the reasons to consider banks as a lending option are competitive rates—you are more likely to get a good deal if you apply at a bank for an auto loan. Another perk is personal service, which you can enjoy most if you seek financing at a bank that you do business with; banks are more likely to give good deals to existing customers because they want to keep their business. Moreover, banks don’t do hard selling of add-ons. They only offer loans.

 

Credit unions:

These function almost the same way as banks, though you are more likely to get a better rate at a credit union. Credit unions are deemed as one of the best sources of auto loans because they offer low rates. These can afford to charge less interest because they are non-profit—they are owned not by shareholders but by their members. They are member-oriented: they can approve loans faster because their operations are local. In addition, they are more willing to work with borrowers with bad credit.

 

Dealerships:

This is the option most car buyers take, and for good reason. It provides convenience that no other source of financing can give: they offer both loans and vehicles. The dealerships themselves aren’t the source of financing; they arrange the financing for the customer by tapping into their network of partner lenders, including banks. Unfortunately, the loan arrangement is what usually makes auto loans from dealers more expensive. Since the dealer acts as the middleman, they take compensation for obtaining the loan on behalf of the buyer. Dealerships are the only source that can give 0% financing and other special incentives because they are connected with the car manufacturers.

 

Online lenders:

This source of financing also offers convenience. You can apply for an auto loan anytime, and the application process is easy and quick. The rates are also competitive—you get lower rates thanks to tight competition in the online lending market. Another thing that makes online lenders a good source of auto financing is the high likelihood of approval. When you cannot get approval from other lenders due to bad credit, you can rely on an online lender to provide you with financing. Be careful, though—many online lenders are out to scam car buyers.

 

P2P lending source:

This is an ideal option for car buyers who cannot obtain financing from traditional loan sources. Instead of financial institutions, individuals provide money for the car purchase. Through a peer to peer lending website, different people pool their money to come up with the amount necessary to buy your chosen vehicle. Loan approval may not be as easy with this lender as with others.

 

Family members/friends:

When you seem to have no luck getting financing from the aforementioned sources, you still have one last option to consider—your own network. You can borrow money from an immediate family member, relative or friend to fund your auto purchase. Due to your relationship to the ‘lender’ in this case, you may get a lower rate and more flexible terms. Nonetheless, don’t take out a loan from someone you know unless you are absolutely sure you can repay the debt. Otherwise, your relationship with the individual will suffer.

Photo Credit: 401K 2012/Flickr/CC BY-SA 2.0

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