Finance FAQ

Finance Frequently Asked Questions

Q: What’s the difference between direct lending and dealership financing?

A: Direct lending is when you, the buyer, get a loan directly from a bank, credit union, or other lender. You agree to pay the amount financed as well as a finance charge. When you sign the contract to buy a vehicle, you pay with the amount financed.
Dealership financing is, as the name implies, financing through the car dealership. You enter a contract with the dealer to buy the vehicle and agree to pay the amount financed. Typically, a dealer will sell the contract to a financial institution to collect your payments.

Q: What is an Annual Percentage Rate?

A: An annual percentage rate (APR) is essentially a fee charged for using the lender’s money to buy a vehicle. This percentage varies by lender and can be negotiated. The lower the APR, the more money you save over time.

Q: Why is my credit score important?

A: Your credit score is determined by how good you are with paying off your debts. In short, your credit score tells the lender how high of a risk you are. A high credit score indicates a borrower is a lower risk while a lower credit score indicates a borrower is a higher risk. Ultimately, a lender will use your credit score to determine your APR and several other factors.