Direct auto financing: What it is and how to find a lender Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make smarter financial decisions by providing you with interactive tools and financial calculators that provide original and objective content. We do this by providing you with the ability to conduct your own research and compare information at no cost - so that you can make informed financial decisions. Bankrate has partnerships with issuers such as, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn money The products that are advertised on this site are from companies that pay us. This compensation could affect how and where products appear on this website, for example for instance, the sequence in which they appear within the listing categories and other categories, unless prohibited by law. Our mortgage, home equity and other products for home loans. This compensation, however, does not influence the information we provide, or the reviews that you see on this site. We do not include the vast array of companies or financial deals that might be available to you. Getty Images/D3sign
3 min read Published October 21, 2022
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Written by Bankrate Written by This article was generated using automation technology and thoroughly checked and edited by an editor from our editorial staff. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the beginning of 2021. They are dedicated to helping their readers to control their finances. They provide concise, well-studied information that breaks down otherwise complex topics into manageable bites. Written by Mark Kantrowtiz and reviewed by Nationally recognized student financial aid expert Mark Kantrowitz is an expert on student financial aid including the FAFSA and 529 plans, scholarships tax benefits for education and student loans. The Bankrate guarantee
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If you have questions about money. Bankrate has answers. Our experts have helped you understand your finances for more than four decades. We continually strive to give our customers the right advice and tools required to succeed throughout life's financial journey. Bankrate adheres to strict standards policy, which means you can be confident that our information is trustworthy and reliable. Our award-winning editors, reporters and editors produce honest and reliable content to help you make the best financial decisions. Our content produced by our editorial team is honest, truthful and uninfluenced from our advertising. We're open about how we are able to bring quality content, competitive rates, and valuable tools to our customers by describing how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated for the placement of sponsored products or services, or through you clicking specific links on our website. So, this compensation can influence the manner, place and in what order products appear within listing categories, unless the law prohibits it for our mortgage, home equity and other products for home loans. Other factors, like our own rules for our website and whether a product is available within your region or within your personal credit score may also influence the manner in which products appear on this site. Although we try to offer a wide range offers, Bankrate does not include information about every financial or credit product or service. After you've decided which color, make , and model you'd like to purchase for your new vehicle you must decide how you intend to purchase it. And if you are looking to finance a , you have quite a few options available. One of these are direct car financing that is, when you get the financing directly from a lender. While the process can vary according to lender, consider the benefits before deciding if direct finance is right for you. Direct auto finance: What exactly is it? Direct car financing can be described as a type of car loan which is available via banks, online lenders and . Its counterpart, indirect financing is accessible through car dealers as well as loan marketplaces. If you prefer a streamlined vehicle buying and financing procedure, direct financing could potentially be an issue. Along with this it is possible that you will have difficult time finding an lender with decent rates for low-cost and . But is not perfect either. Dealerships often offer markups when it comes to financing -- something is not the case when you are working directly with the lender. Direct and indirect auto financing. in-direct auto financing In the instance of direct financing, you'll deal with a bank, credit union, or online lender independently that means you're given the ability to shop for the most competitive deal. Once you've been approved, you can visit the dealership, pick out your vehicle and negotiate the best price and sign the paperwork. Direct financing operates a bit differently. The dealership will visit you to select your vehicle and then work with the dealership's internal finance department to get the auto loan. Even though you have a clear guide to the entire process, there's a significant negative: the dealer will likely increase your interest rates. Therefore, it's a good idea to get preapproved by an outside lender prior to shopping for a vehicle and then presenting it to the lender to possibly negotiate more favorable loan conditions. Another benefit of directly financing your car is that you have the possibility to shop around with different lenders that might not be presented on the car lot. You can get estimates from a variety of lenders and select the most suitable deal based on the terms, rate and other factors rather than just taking the one you're matched with. Direct auto financing is how it works The process of financing your car through a direct lender varies, but these fundamental procedures will be the same. 1. The process of prequalifying multiple lenders is like looking around for rates from lenders. You can pick from the rates offered, loan terms and monthly payment options, in addition to other benefits. to make sure you're getting the best price. 2. Choose one lender and then apply. Once you've been prequalified by a variety of lenders, you are able to choose the lender with the most favorable terms. You will likely need to show evidence of your income as well as an Social Security number and a bank account number for verification to be able to qualify for a loan. The lender will determine the loan amount they are willing to provide based on your earnings, debt, and other aspects. 3. Purchase the car then head to the dealership or . If you already have financing in place you can shop just as a cash buyer would. 4. Begin making payments to start making payments as soon as you can. Many lenders accept online payments and you can sign up for the service online by setting up an account account. You can also choose the option of paying via telephone or mail, however the processing cost could be charged. Where can you locate direct lender direct lender When you are seeking a direct lender, it is best to begin with institutions you already have an existing account. If that's not an option, you can look into other options for direct lending. Check with your local credit union or bank. A lot of credit unions and banks provide direct auto loans however they may have dealership limitations. If you are a member of that specific institution or bank, and are on good terms , you might get a decent rate even if your credit score isn't excellent. Explore the internet There are a variety of online lenders offering direct auto financing, such as or . Oftentimes you will be able to receive financing the same day that you submit your application, and you don't necessarily have to be in possession of a vehicle in order to get financing. It all depends on the lender. Captive finance companies. Captive finance companies are financing companies that are owned by auto manufacturers. You can avail vehicle loan options for cars made from their own parent firm. For instance, GM Financial offers both options for cars manufactured through General Motors. The final word: Financing your car through a dealership is one of the most convenient ways to acquire financing for an entirely new vehicle, but the right financing option for you will depend on your circumstance. For example, if you already have an account with a bank or credit union and you are a member, you could be eligible for directly auto finance. Make sure you compare at least three lenders to ensure you get the best deal on a new auto loan. Learn more
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Written by This article was produced using automation technology, and thoroughly edited and fact-checked by an editor on our editorial team. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are committed to helping readers feel confident to manage their finances with clear, well-researched information that break down complex subjects into bite-sized pieces.
Auto loans editor
Reviewed by Mark K. Kantrowitz Reviewed by Nationally known expert on student financial aid Mark Kantrowitz is an expert on student financial aid, the FAFSA as well as 529 plans, scholarships educational tax benefits, and student loans.
Nationally recognized student financial aid expert
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