Going directly to a car dealer for a loan to keep things simple is a…
A. Great idea because they want you to get the car so it’ll be the best offer.
B. Not great because they typically offer higher interest rates.
C. Great idea because you don’t have to deal with another lender.
D. Not great because car dealers don’t offer loans.
Answer: B. Not great because they typically offer higher interest rates.
Going directly to a car dealer for a loan will save time and come with lots of convenience. It saves you loads of bureaucratic procedures you would have gone through getting the same car loan from a bank. However, you should be worried about a loan with a substantially high markup from car dealers.
Your car dealer is in the business of making money. They will probably exploit every window of opportunity to make more money from you. Requesting a loan from your car dealer is an example of such an opportunity, and you can bet the car dealer will try to make more profit from you.
How is this possible? Well, car dealers may give you loans, but with higher interest rates than bank loans. A loan with a high interest rate makes the acquisition of your car expensive. Thus, even if you want to keep things simple, get to know the cost you’re paying for such simplicity and convenience.