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What financing options do I have to buy a car?

Here's how dealer financing compares with other options like a bank loan or a credit card:

Dealer financing


  • It's the fastest, easiest way to get financing; one-stop shopping, open any time you buy a car
  • You are likely to be approved for regular dealer financing even if a bank turns you down
  • Rates are usually competitive but you have to check; if the dealer offers financing from the manufacturer, you are more likely to get a good deal
  • Special offers like zero per cent financing can be great deals too.


  • Does not always offer the lowest interest rate
  • You may be turned down
  • Can be a high-pressure atmosphere, with a big push to sell you extras.

Bank or credit union


  • Often offers a lower-pressure atmosphere
  • Rates sometimes lower than dealer (where dealer does not offer financing from the manufacturer)
  • Bank can often tell you if you’re paying too much for a car.



  • May take more time to get an answer
  • May turn you down
  • May not offer convenient hours of service (for example, can't arrange to meet on a weekend)
  • May not offer lowest rate.

Credit card


  • You’re already approved to borrow
  • No need to negotiate – you know the interest rate.


  • Charges the highest interest rates; likely to cost twice as much as bank or dealer loan
  • Easy to fall behind if you only make the minimum payment; always try to pay off the loan fast
  • Easy to spend more than you can really afford if your credit limit is high. Don’t do it!

Tip: Negotiate the price of your car first, before you talk about financing. Some people pay hundreds or even thousands of dollars more than they should when they make their deals. Don’t be one of them!

Remember: Even if the deal sounds great, look around. Deals for special financing on your new car really sound good. Sometimes they are, but it pays to check your options carefully.

Learn more: Use this Pay off credit cards and debt calculator to see how long it will take you to pay off your credit card or loan.