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 financial calculators and tools as well as publishing authentic and objective content. We do this by making it possible to conduct research and analyze data for free, so that you can make informed financial decisions. Bankrate has agreements with issuers including, but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this site are from companies that pay us. This compensation can affect the way and where products appear on this website, for example for instance, the order in which they be listed within the categories of listing, except where prohibited by law. Our mortgage home equity, mortgage and other products for home loans. This compensation, however, does have no impact on the information we publish, or the reviews you read on this site. We do not include the entire universe of businesses or financial deals that might be accessible to you. d3sign/Getty Images
3 minutes read. published on October 21, 2022.
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Written by Bankrate This article was generated with the help of automation technology, and then verified and edited by an editor on our editorial staff. 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 dedicated to helping their readers gain the confidence to control their finances by providing precise, well-researched and well-written information that breaks down otherwise complex topics into manageable bites. Review by Mark Kantrowtiz by Nationally acknowledged scholar financial aid specialist Mark Kantrowitz is an expert on student financial aid as well as the FAFSA as well as 529 plans, scholarships, tax benefits for education as well as student loans. The Bankrate guarantee
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We are compensated for the promotion of sponsored goods and, services, or through you clicking certain links posted on our website. This compensation could impact how, where and when the items appear in listing categories, unless it is prohibited by law for our mortgage or home equity, and other products for home loans. Other factors, like our own rules for our website and whether or not a product is offered in the area you reside in or is within your own personal credit score may also influence how and where products appear on this site. Although we try to offer the most diverse selection of products, Bankrate does not include information about each credit or financial item or product. After determining which color, make and model you'd like to purchase for your new vehicle you must decide what you will purchase it. And if you are looking to finance a , you have quite a few options available. One of these are direct car financing, which means you receive the financing directly from an lender. The process may differ by lender take into consideration the advantages before determining if direct financing is right for you. What is direct auto financing? Direct Auto Financing is type of vehicle loan which is available through banks, online lenders and . Its counterpart, indirect financing, is available through car dealers and loan marketplaces. If you prefer a streamlined purchase and financing process, direct financing may be a hassle. In addition it is possible that you will have difficult time finding a lender that offers decent rates for low-cost and . However, it's not perfect either. Dealerships usually charge markups in relation to financing -- something you can avoid when you work directly with a lender. Direct vs. direct auto finance In the case of direct financing, you'll work with a bank, credit union or online lender independently, which means you have the freedom to shop around for the best deal. And once you're preapproved and have the approval, you'll be able to visit the dealership, select your car and then negotiate the best deal and then sign the contract. Direct financing works differently. You'll visit the dealership, select your ride and then work with the dealership's in-house finance department to secure an auto loan. Even though you have a clear guide to the entire process, there's a significant downside -- the dealer will likely mark up their interest. It's therefore worth getting preapproved from an external lender prior to shopping for a vehicle and then presenting your car to the lender to try to get better loan terms. Another advantage of Direct auto finance is the ability to explore lenders outside of what might be available on the vehicle lot. You can get quotes from several lenders and choose the best deal based on the conditions, rates and other variables instead of just taking the one you're matched to. How direct auto financing works The procedure of financing your car through an direct lender varies, but these steps are always in place. 1. Prequalifying with multiple lenders is like shopping around for rates from lenders. You can choose from rates offered, loan terms and monthly payments among other features. So you can be sure that you're getting the best deal. 2. Select one lender and submit your application once you have prequalified with multiple lenders, you are able to choose the lender that offers the best terms. You'll likely have to provide proof of income, the Social Security number and a bank account number for verification in order to be prequalified for the loan. The lender will determine what loan amount they can provide according to your income, debt, employment and other factors. 3. Purchase the car then head to the dealership or . As you have financing in place, you can shop like an individual who is a cash buyer. 4. Make payments to begin paying as soon as possible. Many lenders accept online payments, and you can sign up for using this option by creating an online profile. There is also the option of paying via phone or mail, but there may be a processing charge. Where to locate direct lender direct lender When you are seeking a direct lender, it is recommended to begin with the institutions you already have an account with. If that's not an option, check out other sources of direct lending. Contact your local credit union or bank. There are many credit unions and banks that offer direct auto loans however they might have limitations for dealerships. If you are a member of this particular institution or bank and are in good standing, you could be able to get a reasonable rate, even if your credit isn't excellent. Look online There are many online lenders that offer direct auto financing, like or . Oftentimes you will be able to get financed on the same day you apply, and you do not necessarily need to choose a car depending upon the lender. Captive finance companies Captive finance companies are in-house financing entities owned by auto manufacturers. They offer automobile loan options for cars made from their own parent firm. For instance, GM Financial offers both options for cars manufactured by General Motors. The final word: Financing your vehicle through a dealer is one of the most convenient methods of financing the purchase of a brand new car, however the best financing choice for you is contingent on your specific situation. If, for instance, your current account is with an institution like a credit union or bank and you are a member, you could be eligible for a through direct auto financing. Be sure to look around with at three lenders to make sure that you are getting the best rate on a new auto loan. Learn more
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Written by This article was produced using automation technology, and was thoroughly checked for accuracy and quality by an editor on our editorial staff. Editor: Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are passionate about helping readers to manage their finances with clear, well-researched information that break down complex topics into manageable bites.
Auto loans editor
Review by Mark Kantrowtiz by Nationally known expert on student financial aid Mark Kantrowitz is an expert on student financial aid and the FAFSA as well as 529 plans, scholarships as well as tax benefits for education as well as student loans.
Nationally recognized student financial aid expert
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