Finance, Forex and Investments

what is the difference between financing a car through commercial banks or credit union?

what is the difference between financing a car through commercial banks or credit union? I am planing to buy a new car but i will like to know the differences of financing via banks or credit union, and also what is dealership finance compare to bank finance.

Public Comments

1. I would look in to all of them. But I wouldn't depend on the car dealer. Banks tell dealers I will finance for you lets say as low as 6% but if you can sell it for more you can get a cut. But you can't sell it for more than lets say 10%. This doen't mean the dealer can't get you very good deal. Dont count them out either. Different financial institutions have different policies, but that has nothing to do them being a Commercial bank or credit union
2. A local Credit Union will offer better customer service for one thing. They generally also offer lower rates and easier qualifying than a commercial lender. Since Credit Unions are not for profit they can offer their customers better rates and loan terms. There is a reason why Banks and Insurance companies are the ones building tall buildings downtown. They are using your money. Dealer financing (on new cars anyway) is done through the manufacturers own loan company. Honda Motors Credit, GMAC, Ford Credit (you get the idea). The only advantage these loans have is they are generally tied to dealer incentives and can offer extremely low or zero % loans to well qualified customers. No bank can match those rates but the price of the car is going to be higher if you accept these low cost loans. On a used car dealer financing is smoke and mirrors. All it really means is the dealer plays middle man to a third party lender, they get a kick back (cash) for sending business to the lender. Used car dealers love this because they make most of the money on loan processing then they do the profit margins in the cars themselves.
3. Credit Unions aren't run by corporations for profit. Credit Unions are run by the members - for the members. As such, credit unions offer lower rates on loans, and higher rates on checking and saving accounts. Credit unions also don't nickel & dime you at every turn like banks do. Screw the banks. Go with a credit union. And avoid dealer finance departments if at all possible. They generally have higher rates, and more restrictions on your loan.