car dealer finance vs. credit union cashout finance

murfilein

as per title, does it make more sense to finance car directly through the dealer, or get a cashout through a credit union, pay the car in cash and pay that loan off with the credit union?

i suppose "it depends" of course, but is there a rule of thumb? will the dealer try to squeeze more out of me?

kil

It all depends on the interest rate and repayment term for both. Also your plans for the car - it is more straightforward to sell if the car doesn't have outstanding finance. However, it is certainly easier to do it via the dealer but almost always more expense unless its a new car with a promotion interest rate e.g 2.9% etc

sugarman20

If it's a used car then financing through the car dealer would be more expensive in terms of cost of credit. A loan from the likes of Avant Money would be worth a look as they are usually one of the cheapest lenders.

bazz26

The main difference is that dealer finance is either a PCP or hire purchase agreement where you don't own the car until the final payment is made. It is the property of the finance company who gives you the money to buy it. A credit union car loan on the other hand is similar to a personal loan where the car is owned by you. Credit Unions are more flexible around repayments too if you get into financial difficulty but their loans tend to have higher interest rates to offset the extra risk.

As for dealers trying to squeeze more money out of it. Just do the maths on the interest rate of the loan, how much you are borrowing, the repayment figures and how much the money you are borrowing actually costs you over all. Most big dealers have a dedicated finance adminstrator who takes care of the finance bit once the sales person closes the deal with you. They are very good at throwing all sorts of figures out at you but best thing to do is get a written quote with all the details and take it home to do your own maths. You would be surprised at how many people have no clue what they are actually going to be repaying overall, they only focus on the monthly repayment figure which they use as the only yard stick for affordability.

photosmart

Credit Unions are often the most expensive source of finance (depends on which CU) - just check out APR

on the loan - cheapest at moment tends to be VW Bank ranging from 2.9% to 5.9%, Dacia 5.0% Renault 6.0%

or you could get a loan off Revolut for 6% ish

My local credit union are looking for 9% for Car Loans - would need head examined to borrow off them

maxamillius

Can anyone explain why places such as an post, Avant advertise an interest rate of 6% on a car loan but when the loan is approved the interest rate is more like 9.3%?

murfilein

https://www.boards.ie/discussion/comment/119780740#Comment_119780740

oh boy... will have to take care and keep my eyes opened.

CuriosityKilledtheCat

https://www.boards.ie/discussion/comment/119780740#Comment_119780740

The advantage of the Credit Union loan is that if you are in a position to pay a little extra monthly or even drop a lump sum off the loan, there are no penalties and this will reduce term and/or interest paid. I generally take a 3 year loan from CU but end up paying in 2 years or thereabouts so it suits my purposes well.

maxamillius

Are people only getting the low interest car loans with an post/avant if they have had a previous loan with them? I’m looking for 22k over 4 years but rate seems to be around 8/9 %

bazz26

I think the days of cheap credit will be gone for a while.

davehoneyyy

It really depends on the interest rates and terms offered by both. Dealers sometimes offer lower rates through manufacturer promotions, but they might add fees or limit negotiation on the car price. Credit unions often have competitive rates with more flexible terms and no hidden fees.

A good rule of thumb is to compare the total cost over the loan term. Also, with a credit union cashout, you own the car outright, while dealer finance might have restrictions like balloon payments or mileage limits. Have you checked the rates both options are offering?

User1998

https://www.boards.ie/discussion/comment/123217503#Comment_123217503

3 year old thread ..

beachhead

https://www.boards.ie/discussion/comment/119780740#Comment_119780740

My credit union charges 6.96% APR and never 9% as stated above.Each CU charges different rates depending on their reserves.Keep well away from Avant for anything.IMO - VW are the dearest for loans.

It would be an idea if you spoke to your CU.If you are in full time and have a decent level of savings already you might get a reduced rate.No savings or dealings with them before then no loan.

3 years ago the interest rate was 5.2% APR or 4.8% Can't remember exact.Dumped paperwork when I sold the car.

Sir Galahad

As mentioned above, each CU sets it's own rates. Where do you live and work ? Joining a CU involves their "Common Bond", this is sometimes the area where you live or if it's an Industrial CU (work place) it'll be where you work. So Public Servants will be PSCU and Gardai are St Raphaels CU, if you live in Dublin 15 then join Blanchardstown & District CU.

CU's are more flexible if you have an issue with repayments etc, and you get free life cover on the loan.