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5 Times It's Better to Finance Your Used Car Through the Dealership

by Remie Van Der Hulst

When you're looking at buying a used car, assuming you can't pay the full amount in cash, you need to decide whether to finance it through the dealership or through a separate institution, such as a bank. Going through a separate institution comes with its own advantages, but there are still plenty of times when financing through the dealership might be more beneficial – here are just five.

1. When You Have Excellent Credit

Dealerships will often only work with customers who have extremely good credit ratings. Because they arrange loans through banks on your behalf instead of actually offering them to you directly, it can get tricky for them if you aren't able to come up with the money, so it's natural for them to prefer safer choices. If you have less-than-stellar credit, you might find yourself facing exorbitant interest rates.  

2. When You'll Benefit from Finance Deals

One of the biggest and most important benefits of dealer financing is being able to take advantage of their deals. Many dealerships will offer changing monthly offers in order to bring in new business; these will usually be aimed at new cars, but you should still be able to find some deals on used models.

3. When You Can Find Positive Online Reviews

Before deciding to finance your new used car through a dealership, you should make sure that other people have enjoyed their services. Go online to see if you can find some reviews. If people have been generally happy with the dealership in question, it's likely that they are dedicated to customer care, in which case they are also likely to work harder to find the most advantageous financing options.

4. When You Have a Pre-existing Relationship

Dealerships like working with people they already know, and are often willing to provide a more competitive rate of interest or accept a lower down payment if you've used them before. If, for example, you're buying a used car for one of your children and already have a new car on lease from a nearby dealership, you might be given better treatment by going through them.

5. When You're Looking for Convenience

Some people value convenience above all else, and it's certainly easier to arrange your financing at the same place you pick out your car. Doing so will also tend to save some legwork on your behalf since dealerships will shop your credit profile around to several banks in order to find the best loan rates, saving you from having to do this yourself.

For more information on used car finance, talk to a professional.