Personal Auto Loans vs. On-The-Lot Loans: Which Are Better?
Posted on: 21 May 2019
If you can't pay for a car in cash, there are two major ways to get one. You can either secure a loan through a bank or a credit union's auto lending services, or you can get an "on-the-lot" loan. Often, you'll be encouraged to get an on-the-lot loan regardless, but there are some advantages to using a credit union auto lending service first.
What are the Benefits of a Personal Auto Loan?
Before you go to purchase a car, you can acquire an auto loan with a credit union. The lender is going to tell you how much you can spend on a vehicle, and you'll be able to walk on the lot already knowing how much you qualify for. All of the terms will be set, so you'll know exactly what your interest rate is going to be in advance. This can make budgeting very easy.
When you get a loan on the lot, you don't always know exactly how much it's going to cost, because you're walked through the process quite quickly. Your interest rate and terms can change, and you may not find yourself with a loan that suits your budget.
What are the Benefits of an On the Lot Loan?
On-the-lot loans usually take any type of credit score and any type of income. In fact, if there's a specific car you want, often the dealership will be able to negotiate a deal with you. Thus, while it's usually more expensive than getting a loan in advance, it's also usually more flexible.
There's also something to be said about the convenience. When you purchase a car on the lot, you only need to go to a single place and fill out a single application. For the most part, the dealership is going to do the work for you.
Should You Get a Personal Auto Loan from a Credit Union?
Usually, if you're getting a personal auto loan, a credit union is preferred to a bank. Credit unions are smaller and usually have better interest rates and superior customer service. If you can get a personal loan from a credit union, that is usually the best choice, because you'll typically pay less overall.
However, if you're rejected for a credit union loan, you shouldn't assume that you can't get a car. You should go to a lot and ask about on-the-lot financing instead. Ultimately, you should be able to get the car you want; you may just need to pay a little more.
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