Direct vs. Indirect Financing for Auto Loans: How to Choose
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What Are Indirect Auto Loans?
What Are Direct Auto Loans?
Direct vs. Indirect Auto Loan Financing
How They’re Similar
How They’re Different
Direct Finance Pros and Cons
You can shop around for rates and terms, choosing what’s right for you from your lender of choice. In some cases, a dealer will mark up the interest rate charged; with direct financing, there’s no intermediary to potentially do that. You are more in control. For example, you can decide how many lenders to consult with and can therefore manage how many times your credit is checked. You shop at a dealership and also need to talk to one or more lenders, which is more time-consuming than handling everything in one location. If multiple lenders check your credit, this could impact your credit score. You’ll need to do the legwork of researching on your own, rather than relying on the dealership finance department’s network of lenders.
Indirect Finance Pros and Cons
You won’t have to research and check in with multiple lenders, which will save you time. The dealership will coordinate the process, making it more seamless for you. The dealer’s finance department can run your credit for different lenders on the same day, helping to ensure those get counted as only one hard inquiry on your credit. A dealer could bump up the interest rate, making it more expensive for the borrower. The dealer is more in control of the process than with a direct loan. You won’t have the opportunity to shop around to compare multiple loan offers.
Is Private Lender Refinancing a Direct or Indirect Loan?
Frequently Asked Questions
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