There are different pros and cons when it comes to taking a car loan through a dealership or a bank. Based on your personal needs and requirements, you can choose between taking a loan from a dealership or bank.
If you do not have the time to do the paperwork that is required for a car loan, a dealership would be ideal as they do all the documentation needed for the loan very quickly. They have experienced staff who help the customer through the documentation process with ease. Time consumption for the loan amount is very minimal with a dealership as they do the entire loan process on your behalf to get the loan sanctioned for you. So, if time is a problem, a dealership is a better idea as one will need to do all the documentation themselves if applying for the same from a bank.
If you want a variety of lender options, borrowing from a bank directly would be a better idea. There are a wide variety of banks that offer different loan amounts, tenures, interest rates and EMI repayment options. There also have other added features on their loans that can be explored by the customer. One can choose their preferred bank based on personal needs and requirements. In the case of a dealership, they will have a tie-up with only one particular lender or a few lenders. This restricts the opportunity to choose for the customer.
If one wants a lower rate of interest, borrowing from a bank directly would be beneficial. This is because banks have a certain fixed interest rate for most of their credit products. The interest rate can also be negotiated if one is an existing customer of that bank and has a good credit score. In the case of a dealership, they will need to make a profit for themselves and so this usually reflects in a higher interest rate.
If one has a poor credit score, a dealership would be a better idea. Banks take into account one’s credit score as proof of creditworthiness. So, if you do not have a good credit score that is above 750, there is a higher chance of getting your car loan rejected by a bank. Whereas, a dealer will look for ways to get your loan approved and can even give the customer certain financing packages for a poor credit score or poor credit history.
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