Car loans aren’t just limited to dealerships and banks anymore. Financing for your car loan can come from different sources. All these different sources have their advantages and disadvantages. The best source of car loan financing would be the one that would suit your needs and would give you the best deal possible.

Car Loan Financing Sources

• Dealership. A car dealership is one of the more popular sources of car loan financing. Mainly because it’s convenient to get a car loan from the dealership itself. They’re open at night and on the weekends and they’re right there where you shop for your car. They’re can process your car loan almost immediately so you’re able to drive away with your car within the day. Their rates can also be competitive if you took the time to shop around.

The problem with dealerships is that they’ll do everything they can to make a sale. This can make price comparisons difficult if you have a car salesman following you around. They’ll also try to sell you as many add-ons as possible and that could increase the amount of your loan. Lastly, the main disadvantage of dealerships is that their car loans are usually front-loaded. A front-loaded car loan means you pay most of the interest at the beginning. So if you want to pay off for your car loan early, you may end up paying more than you should.

• Banks and Credit Unions. The great thing about banks and credit unions is they usually give you competitive rates. And because they’re not trying to sell you something, they’d normally tell you if you’re paying too much for your car or if the loan terms are not manageable. Car loans from banks and credit unions are usually spread out the interest throughout the loan term. You could even get free life insurance or disability insurance with your loan.

The problem with banks and credit unions is they’re only open during office hours. This means you’ll have to take a day off from work in order to apply for the loan.

• Online Financial Institutions. With online financial institutions, it’s easy to do price comparisons. Applying and processing of car loans are usually really fast and easy. The disadvantage of this type of financial institution is you have to have a good credit record and you have to be fiscally responsible because they don’t have people that could help you out. Online financial institutions can also be risky if you don’t know what you’re doing and you don’t do your homework. There are scam online financial institutions out there that would take your down payment then disappear without giving you your loan.

• Home Equity Loan. Using your home equity to finance your car loan can help save you money because you can take some of the interest out on your taxes. However, this is a risky move given the current mortgage crisis. Once you lose your house, you’ll also lose your car.