Types of Auto Finance Companies

Not everyone is able to pay for a car in cash. Many people have financial constraints. Therefore, in most cases, there is the need for auto finance. There are different auto finance companies that offer car loans. Finding the company that offers a loan with terms that work for you is important.

Primary & Secondary Lenders

There are two classes of auto finance companies: primary and secondary lenders. Primary lenders are in the mainstream, thus, they usually have stricter terms. You will generally need to have a good credit score to be able to obtain auto financing from a primary lender. If you have a poor credit score, a secondary lender may be the better option, however they might require you to provide a down payment on the car if your credit score is particularly bad.

The Different Types of Auto Finance Companies

Dealerships

Dealerships don’t just sell cars, they also offer auto financing. When searching for a car at a dealership, you should also confirm whether the dealership offers auto financing.

A dealership can be better than other finance companies because they’re more likely to offer friendlier terms. The car can also act as security. That will reduce the amount of money that you have to pay for down payment.

It’s easy to strike a good financing deal at a dealership because nothing is set in stone: There is always room for negotiation. Therefore, having good negotiation skills will come in handy.

A dealership may also offer you a better auto finance deal if a past customer has recommended you. Thus, you should consider seeking referrals and recommendations before visiting dealerships.

Banks

Banks are finance companies, which means they offer car loans. It can be easier to get auto financing from a bank where you are a customer. If you have a pay slip, you can obtain financing even if you have a bad credit score. The pay slip combined with the car will act as collateral.

If you decide that the car will be the security of the loan, the bank will keep the logbook until you complete the loan. There are many banks out there to choose from.

Credit Unions

You can also obtain auto financing from a credit union because credit unions are also finance companies. You will need to submit a loan application.

A credit union is member owned. As a member, you will own shares in the credit union. Based on your shares, you can obtain auto financing. Other members will also guarantee you.

How to Determine the Best Auto Finance Company

You need to obtain as many auto finance quotes as possible. After that, you should determine the finance companies are the best. You should do so based on two factors: