Vehicle finance - dealer vs directly with the bank?

[kylewilliam]

Hello all.

This is my first time buying a car on finance.

I got a pre-approval letter from my bank, and my banker advised me not to arrange finance through the dealers because once they make the application, my banker is unable to get a better rate for me.
When I went to a dealership to look at cars and discuss financing, they told me pretty much the same thing. That if I apply directly at the bank, they won't be able to get a better rate for me, and that it would be best if I let the dealer make the applications to various banks to get the best rate for me.

Which of these is correct?

Is there any harm in making these applications myself and seeing what the best rate I can get is?

 

[kylewilliam]

Hello all.

This is my first time buying a car on finance.

I got a pre-approval letter from my bank, and my banker advised me not to arrange finance through the dealers because once they make the application, my banker is unable to get a better rate for me.
When I went to a dealership to look at Bhph cars and discuss financing, they told me pretty much the same thing. That if I apply directly at the bank, they won't be able to get a better rate for me, and that it would be best if I let the dealer make the applications to various banks to get the best rate for me.

Which of these is correct?

Is there any harm in making these applications myself and seeing what the best rate I can get is?

thanks in advance for any help

 

[Jeff Kershner]

Banks and Dealers "banks" are going to compete for your business to some degree. Unless you’re already working with a bank or credit union, I recommend applying for credit through the dealership. Not only can they often match or get you a lower/competitive rate, but it’s often more efficient.

Most dealers work with several banks (local, manufacturer and national) and many times will bump their “buy rate” and still return an interest rate lower than what you can can get walking into a local bank branch yourself.

Before applying for ANY credit with ANY bank, find out what your average credit score is before hand - that way you know what credit tier you qualify for. If you’re a tier 1 rating of 800-850 - the banks/dealers are going to offer you their lowest rate and since most States have a cap on bumping the rate, the offer will be very competitive to lower than the local bank. A tier 2 rating (740–799) will also often return a competitive rate not much higher than the tier 1 rate. Once you get into the Tier 3 (670–739) and 4 (580-669) - that’s when you start seeing a swing in the higher rates.