Dealer financing offers convenience, since you can complete the purchase and loan in one visit, and dealers sometimes have access to manufacturer-subsidized rates on new vehicles that outside lenders can’t match. However, dealer rates can also be marked up above what you’d qualify for elsewhere, since the dealership earns a commission on the financing itself. Bank and credit union loans typically require a separate application process but often come with more transparent pricing and, for existing customers, sometimes better rates. Comparing both options through our auto loan calculator before you shop gives you a clear benchmark to negotiate against.
Getting pre-approved by a bank or credit union before visiting the dealership is one of the most effective ways to secure a better deal, since it gives you a firm offer to compare against whatever the dealership presents. This is especially useful if your credit score has changed recently, as explained in how your credit score affects your car loan rate. Either way, always compare the full APR — not just the interest rate — between offers, as detailed in auto loan APR vs. interest rate.