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 aim is to assist you make better financial decisions by offering you interactive tools and financial calculators that provide original and objective content, by making it possible to conduct research and analyze information at no cost – to help you make informed financial decisions. Bankrate has agreements with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The offers that appear on this site are from companies that pay us. This compensation may impact how and where products appear on this site, including such things as the sequence in which they appear in the listing categories in the event that they are not permitted by law. This applies to our mortgage, home equity and other products for home loans. But this compensation does affect the content we publish or the reviews that you see on this site. We do not cover the vast array of companies or financial offers that may be accessible to you. Getty Images/D3sign
3 min read Published October 21, 2022
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Written by Bankrate The article was created by using automated technology. It was then thoroughly verified and edited by an editor on our editorial staff. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are committed to helping readers to take control of their finances. They provide concise, well-studied information that breaks down complicated topics into digestible pieces. Written by Mark Kantrowtiz and reviewed by Nationally well-known Student Financial Aid expert Mark Kantrowitz is an expert on student financial aid, the FAFSA, 529 plans, scholarships tax benefits for education and student loans. The Bankrate promises
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They ensure that what we write ensures that everything we publish is accurate, objective and reliable. The loans reporters and editors are focused on the areas that consumers are concerned about the most — the different types of lending options as well as the most favorable rates, the best lenders, ways to pay off debt and more — so you can feel confident when making a decision about your investment. Integrity in editing
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If you have questions about money. Bankrate has the answers. Our experts have helped you understand your money for over four years. We continually strive to provide consumers with the expert advice and tools required to succeed throughout life’s financial journey. Bankrate adheres to a strict code of conduct , so you can trust that our information is trustworthy and precise. Our award-winning editors and journalists create honest and accurate information to assist you in making the right financial choices. Our content produced by our editorial staff is factual, objective, and not influenced from our advertising. We’re open about how we are able to bring quality content, competitive rates, and helpful tools to you by describing how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the placement of sponsored products andservices or when you click on certain hyperlinks on our website. Therefore, this compensation may affect the way, location and when the products are listed within categories, except where prohibited by law for our mortgage and home equity products, as well as other home lending products. Other elements, like our own proprietary website rules and whether the product is available in your area or at your own personal credit score can also impact the way and place products are listed on this site. While we strive to provide an array of offers, Bankrate does not include information about each credit or financial item or product. After determining which color, model, and make you’d like for your next automobile, you have to determine the method you plan to buy it. If you’re planning to finance your purchase , you have quite a few options available. One of them are direct car financing, which is when you get direct financing from a lender. Although the procedure can differ depending on the lender, consider the benefits prior to deciding if direct financing is the right choice for you. How do you define direct car financing? Direct Auto Financing is type of car loan that is readily available via banks, online lenders and . Its counterpart, indirect financing, is available through car dealers as well as loan marketplaces. If you’re looking for a simpler purchase and financing process, direct financing could potentially be a hassle. Along with this it is possible that you will have difficult time finding a lender which offers reasonable rates for no- and . However, it’s not perfect either. Dealerships typically charge markups in relation to financing — which you’ll be able to avoid if you directly work with an lender. Direct vs. in-direct auto financing In the instance with direct finance, you’ll deal with a bank, credit union, or online lender on your own, which means you have the ability to shop around for the best price. After you’ve been preapproved and have the approval, you’ll be able to visit the dealership, pick out your car, negotiate the best deal and then sign the documents. Indirect financing works a little differently. You’ll visit the dealership then choose your car and work with the dealer’s in-house finance department to secure an auto loan. Despite having a guide through the entire process, there’s a major downside — the dealer may raise their interest. So, it’s worth getting preapproved from an outside lender prior to shopping for a vehicle and then presenting your car to the lender to possibly negotiate more favorable loan terms. Another benefit of Direct auto finance is the possibility to explore lenders outside of what might be offered on the car lot. You can request estimates from several lenders and select the most suitable deal based on the rates, terms and other variables instead of just taking the one you’re matched to. Direct auto financing is how it works The procedure of financing your car through an direct lender varies, but these steps are always in place. 1. Prequalifying with several lenders is similar to shopping around for rates from lenders. You can pick from the rates offered, loan terms and monthly payments among other features. So you can be sure that you’re getting the best price. 2. Choose a lender and submit your application once you have prequalified with multiple lenders, you will be able to select the lender that offers the best terms. It is likely that you will need to present proof of income and a Social Security number and a bank account number for verification to be able to qualify for a loan. The lender will decide the loan amount they are willing to provide according to your income, your debts, and other factors. 3. Purchase the car go to the dealer or . As you already have financing secured you can shop just as a cash buyer would. 4. Begin making payments to begin making payments in the earliest time possible. The majority of lenders accept online payment and you can join the service online by setting up an account profile. You may also have the option to pay by telephone or mail, however the processing cost could be charged. Where can you locate direct lenders direct lender When you are looking for a direct lender, it is recommended to begin with the institutions that you already have an existing account. If this isn’t an option, consider other direct lending sources. Ask 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 the particular financial institution and are on good terms , you might be able to get a reasonable rate, even if your credit isn’t good enough. Explore the internet There are a variety of online lenders offering direct auto financing such as or . In most cases, you’ll be able to receive financing within the same day you apply, and you do not necessarily need to choose a car depending on the lender. Captive finance companies. Captive finance companies are in-house financing entities owned by auto manufacturers. They offer vehicle loan options for vehicles manufactured from their own parent firm. For instance, GM Financial offers both choices for vehicles manufactured by General Motors. The final word: Financing your car through a dealership is one of the most convenient methods to finance a new vehicle, but the best financing choice for you is contingent on the circumstances you’re in. For instance, if you already have an account at a bank or credit union and you are a member, you could be eligible for the direct financing of your vehicle. Be sure to look around with at three lenders to make sure you receive the best price for a new car loan. Find out more
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Written by This article was generated using automation technology and thoroughly edited and fact-checked by an editor on our editorial team. 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 take control of their finances with clear, well-researched information that breaks down complex topics into manageable bites.
Auto loans editor
Reviewed by Mark K. Kantrowitz Reviewed by Nationally acknowledged expert on student financial aid Mark Kantrowitz is an expert on student financial aid and the FAFSA, 529 plans, scholarships, education tax benefits along with student loans.
Nationally recognized student financial aid expert
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