A brand new car can cost around $40,000, and a pre-owned
vehicle from a dealership at approximately $15,000. With the huge amount required to acquire a vehicle,
some people tend to use the direct lending option to get a loan straight from
the financing companies. Others go for dealership
financing, where they can get financial aid through the dealership. Here's a closer look on your options on vehicle financing.
What is Direct Lending
Direct lending allows you to receive loans directly
from monetary institutions such as credit unions, banks, and finance companies. You will go into an agreement stating that
you consent to pay the amount financed together with the amount charged in a
definite period. Direct Lending may provide you with benefits such as finding a
better car price or getting the credit before you even purchase a car. With direct lending, you will have the
opportunity to go into several shops and ask different lenders about the terms
and conditions before you decide to purchase the vehicle. Credit in advance allows you to have the
credit even before you buy the car.
Through this system, you will know your budget for your vehicle.
Dealership Financing
One more familiar form of vehicle financing is called
dealership financing. Under this type, the
vehicle financing will have to come through the dealership. You and the dealer will have to go into a
contract stating that you agree to pay for the vehicle you will acquire in a period
stated on the agreement. The dealer
chooses to retain the contract, but they usually sell it to credit unions, banks,
and finance companies.
With dealership financing, it is more convenient since
the dealer will offer the vehicle financing and the vehicle in just one
location. Some dealers also have an
extended work time and may even be available during weekends. There is also a more flexible option for
financing due to the dealers' relationship with the different monetary
institutions. There are also special
programs that you can acquire with dealership financing. But in most cases, you need a larger down
payment or a good credit standing if you want to be eligible for the special
program.
Additional Pointers on Financing
Before leasing or buying a new vehicle, you must
review both state and federal laws that may affect the process of vehicle
financing. The law will allow you to
find better leverage on the vehicle that you want to purchase. You should also analyze your budget when buying
a car. The budget should also include
the monthly expenses of your new vehicle.
Most dealerships have a department solely responsible
for addressing your concerns on Vehicle Financing. They will be able to tell you about the
available option in their financing.
They may ask you to register for a credit request which may include the
most basic information. Be sure to
understand the terms and agreements stated on the contracts before you sign them.
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