buy new or second hand car

How Dealership Financing Is Better Than Bank Financing?

in Automotive/Finance and Investment

When you plan to buy a car, there are certainly important factors to be considered beforehand. The budget and payment option are one of the most important and first steps every person who wants to buy a car thinks about. Many people try to look for an option like buy new car pay monthly. But is this the only option that people should try? This post is about how customers can purchase cars in installments from the dealer and why it’s a better option than financing from banks.

Two Financing Options

As mentioned earlier, there are two financing options for car buyers and these are as follows:

  1. Dealership Financing
  2. Bank Car Loan

This is important to understand the difference between and why the first is better than the second one.

Dealership Financing

This is one of either options that anyone can choose when it comes to buying a car. In this option, the buyer has more benefits than the other option. You can buy new or second hand car and it all depends on your budget. The salesperson of the dealer shop asks their customers what amount or budget they have. You may be looking for an old or used car but the salesperson can suggest a better and new car within your budget.


  1. It’s very easy to get installment option and the dealers agree on that with ease
  2. There is no need to follow strict policies
  3. The dealers have multiple options and simple rules for anyone who wants to get a car in installments
  4. You have both the options, get the new or used car within your budget
  5. Multiple installment options with lower or higher down payment


  1. Higher interest rates by the dealer
  2. It seems more like an expensive option to buy a car and pay per month
  3. The dealers want the client to follow the policy and stay with that

Bank Car Loan

Almost all the banks have their plans for people who want to get loans for buying cars. This is almost like buy a new car pay monthly policy. However, this is somehow different than dealership financing because of multiple reasons.


  1. Better loan options and low-interest rates
  2. There are no chances of any fraud like in dealership financing
  3. Banks also offer other kinds of loans when you apply for a car loan


  1. Very strict rules that must be followed
  2. Banks only provide a loan to people who have a healthy relationship with the banks
  3. Not many options for paying down payments like in the dealership financing
  4. Rates are non-negotiable
  5. They want complete details about the person, salary or income sources, higher upfront amount and don’t compromise on any step during deals


From this discussion, it’s very easy to conclude that dealership financing is a way better option than bank loans. The reasons are discussed above. Nevertheless, the bank loans are more like a headache while the dealership financing is all about comfort and building relationships with dealers for future deals.

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