There are a couple of different way to get a car loan. The first type that you'll see if direct lending. Not surprisingly, this is getting a loan directly from the bank or credit union. You can also get financed through the dealer, which is called indirect financing because they don't make the loans, only act as a middle man between you and the bank.
The financial landscape has changed a lot in the last few years. Banks have really tightened up lending with all the recent shake up in the financial markets. Some of the biggest auto lenders have even shut their doors completely. This has serious impact on car buyers.
Lenders have become more selective. Of course, you can still find great rates, but only if you have great credit. The first place you should look is your own personal bank.
Getting your loan this way has numerous benefits. Direct lending makes the borrowing process much more personal. The personal evaluation isn't part of the indirect lending process, where they typically use just a computer model to determine credit worthiness. These computer models are based primarily on credit scores, however a decent credit score guarantees nothing.
Direct lenders, of course, will glimpse at your credit score too, however they'll review your whole credit history and try to understand you as a person. You can usually speak one on one with the direct lender and explain your story, helping them to understand you and your capability to repay the loan. It's almost always a sensible practice to
get pre approved for a auto loan
, </a>either online or at the local bank. You'll be getting the additional advantage of a local bank doing almost everything they can to get you funded, as they definitely won' want to suffer a loss of your normal savings business.