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If you need a car and you can’t afford it, you may turn to financial institutions for help. You have three car financing options here: the bank, the credit union or the manufacturer’s financing. In this article, I am going to detail these three options paying attention to their advantages and disadvantages.

Bank vs. Manufacturer’s Financing

Some car manufacturers offer their own car financing. Examples are Ford and General Motors. This car financing is often low-interest rate and comes with some features. They may offer a cash-back or other finance deals. This year Chevrolet offered 7.49%, BMW – 5.59%, Nissan – 4%, Hyundai – 3.99%

However, these programs apply only to certain vehicles and may require a large deposit (down payment) and shorter duration contract. You must also have a strong credit rating in order to take advantage of the offer. In fact, if your score is high, you may end up getting a very good deal. According to Experian Automotive, some borrowers secured an interest rate of 1% in 2014 with the average credit score of 748.

However, some car manufacturers allow their dealers to charge a higher rate in order to “markup”. So, eventually, the buyer may end up paying a high-interest rate.

While the manufacturer’s car financing may be an attractive option, it is not accessible for everyone. If you don’t have a large down payment or if you want to have a longer duration contract, you better choose between a bank or a credit union.

Bank vs. Credit Union

If you compare the banks and credit unions, the first thing that you will notice is that credit unions have higher interest rates. But instead, they offer better customer service and lower fees. Banks normally have lower interest rates, but their fees are high. They also offer better conveniences with regard to mobile access, location, etc. Banks also offer reward programs and bonuses that credit unions normally don’t.

You need to research several institutions before you make a choice. Your decision may depend on what you prioritize. If easy-to-use banking apps and bank location are important to you, you might probably go for a bank. If you care about customer service, a credit union is a better place. Things may not be very straightforward in terms of interest rate. You need to compare both the interest rate and the fees because sometimes you may end up with a higher rate due to high fees.