Why You Should Always Finance Directly with a Bank

Most car dealers have relationships with banks, but you shouldn't let them arrange the financing unless you're willing to pay a fat commission.

This commission is called "finance reserve" and it could end up costing you over $2,500 on a 60-month loan.

If you're going to finance through a bank, make sure you do your paperwork at the bank, not at a dealership. Many people don't know this, but you can negotiate the rates directly with a bank.

First, you should comparison shop online for the best finance rates, then use those rates as a bargaining chip with the bank. See if they can beat your best rates.

You should also shop your rates to credit unions.

Some banks will give special loan rates if you have a long history with them, or if you already have a checking or savings account. You should contact all banks where you already have a relationship in place.

After you comparison shop your auto loan, your final step is to have the dealer try to beat your best rate.

There are cases where a dealer will beat your lowest rate (even if they arrange it through a bank), so you can rest assured you're getting the best auto loan possible - but only if you already took the time to shop around directly with the other finance sources.