What is dealer or dealership financing?

Dealer or dealership financing means that you are granted credit directly from the dealer from whom you are purchasing a vehicle. The dealer may then sell the credit contract to a bank or other company. In contrast, with bank or credit union financing, you obtain the loan directly from the bank or credit union.


The APR offered by the dealer may be higher than what you can obtain by taking out a loan directly from a bank or credit union. In general, dealers and lenders are not required to offer the best rates available. You may be able to save a lot of money over the life of the loan by negotiating the interest rate with the dealer.


When a dealer advertises special financing rates, read the fine print to see if they are for a particular length of loan, type of car, or for people meeting a certain credit standard. In some cases, you may have a choice between a manufacturer’s rebate or a special financing rate. Shop around for auto loan interest rates before you go to the dealership so that you know what interest rate you could get elsewhere.

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