If you need to finance a vehicle, you may be wondering whether to go through the dealership or work with a local bank. Naturally, borrowing from each lender has its pros and cons. Here’s what you should know about both routes so you can make a sound financial decision. 

When to Borrow From the Dealership 

The greatest advantage of taking out a loan with the dealership where you’re purchasing the vehicle is convenience. As long as you qualify, you can simply go in, sign a few documents, and leave in your new car a short while later. When it comes to major purchases, though, it’s important to remember that convenience often has a cost.

Generally speaking, dealerships offer higher interest rates, which means customers who borrow from them almost always end up paying more. However, there is one exception. If you’re taking advantage of a special sale, you may have to finance through the dealership to get the discounted price. As long as the savings are significant, though, you could end up paying less over the life of the loan, even if it comes with a higher interest rate. 

When to Borrow From a Bank 

Financial institutions almost always offer lower APRs than dealerships. As such, it’s wise to finance through a bank if you want to secure a lower monthly payment and pay less in interest over the life of the loan. And if you already have a checking or savings account with the lender in question, there may be additional savings. Local institutions value their customers, and they show this appreciation by offering all kinds of benefits for their continued patronage. 

For auto loans with competitive rates, turn to Putnam 1st Mercantile Bank in Cookeville, TN. This locally owned and operated financial institution offers a broad range of loan services for their loyal customers. They can also handle all your personal and business banking needs. To find the branch nearest you, visit their website. To talk to someone at the bank’s main office in Cookeville, call (931) 528-6372.