When you apply for a car loan, one key decision you’ll need to make is whether to apply directly with traditional lenders, or to work with the dealership acting as a third party. When you choose to work with a North Wales-area dealership, it’s known as “in-house” or “indirect” financing, and your dealer will act as a middleman between you and multiple lenders. Applying for a loan at a bank, credit union, or other financial institution is referred to as “direct financing.”
So, what are direct and indirect finance and how do they differ? At North Penn Mazda, we want you to know how car financing works so that you can choose the path that fits your needs in Lansdale. In the guide below, we’ll be taking a closer look at the advantages of direct finance and indirect finance, in addition to any possible drawbacks.
To effectively compare direct vs. indirect finance options, you need to know a bit more about them. We’ll start with a clear definition of what is direct and indirect finance is:
We know that when it comes to auto financing, one size doesn’t fit all. So, what method is the best match for your needs? First, we’ll consider the advantages of direct finance:
The main drawback of direct financing is that it takes more time to complete and requires more research to find the options that meet your needs.
With indirect or “in-house” financing, more parties are involved than with direct financing. Working with a team can speed up the application process, because you can search for multiple loan opportunities at the same time and your dealer can run your credit multiple times per day.
While indirect financing tends to be faster and more convenient for Lansdale car-buyers, disadvantages include the chance that you might end up paying a bit more.
If you’re unsure about the right option for you, our team is here to help you compare direct vs. indirect finance in detail! Stop by our finance center in Colmar to discuss the advantages of direct finance with our dedicated auto finance experts. Contact us or check out our online car-buying guides for more information.
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