Financing a Car Loan Through a Bank: Is It a Good Idea?

Financing a Car Loan Through a Bank: Is It a Good Idea?

Posted on March 3, 2023

When it comes to financing your next car, there are mainly 2 different routes you could take; financing through a dealership, or financing through your bank. So, how could you know which route to take?

Everyone’s situation is different and there are certain times where you would choose one over the other. this article will discuss what is involved in financing through a bank.

Things to Consider

When financing a car loan through a bank, you are preapproved for the loan before you even enter a dealership. This is great because you don’t have to worry about having to wait for weeks to find out if you are approved for the specific car you have chosen.

This also means you don’t necessarily need to choose the exact car you want until you have already been pre-approved.

This could also be good for you if you want to save time and ignore some of the delays that can occur at the dealership point of sale. It is also worth mentioning though, that banks may be frustrating to work with at times because there is often a lot of paperwork. As well as the back-to-back meetings may be involved.

Credit Score

When financing through a bank, they typically cater to those of us who have good or great credit scores, and will be significantly more comfortable giving those people bigger auto loans. So, if you do not have a great credit score, it may be easier for you to finance through a dealership. They are generally more lenient towards credit scores. Like us!

In the contrast though, if you are considered to have a good credit score, it may be more advantageous for you to finance through a bank, as you will very likely get approved.

FYI, Credit scores in Canada range from roughly 300-900, and a score higher that around 660 is considered “good”. (If you are interested in checking your credit score, this can be done for free online by visiting a website like Borrowell).

Here's something that’s important to note if you are thinking of financing an auto loan through a bank; you don’t necessarily have to get a loan from the bank you are currently associated with. So, do some research and see which banks have the best offers (RBC, Scotiabank, TD, BMO, CIBC and others all offer car loans). Also, keep in mind that some banks/credit unions have limits when it comes to the aspects of the car such as age, mileage, and more.

Thanks for reading! If you're ready to finance your next car loan. Contact us here.