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Pros & Cons of Financing a Vehicle

Most buyers don't walk into a dealership with fistfuls of cash.
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The average American buys nine vehicles in their lifetime. With so much practice, it makes sense that we would understand exactly how to buy a car for the lowest cost out of pocket. But unfortunately, most car buyers don't learn how to find the most affordable lending option.

Most buyers don't walk into a dealership with fistfuls of cash. Instead, they borrow the money needed to purchase their dream car. Some buyers get their loans for new or used vehicles from a bank or a credit union like Andrews Federal, while others finance directly through the dealership.
So, where is the best place to get a car loan – bank, credit union, or dealer? Consumer advocates agree that credit unions almost always offer the best financing choices for cars, motorcycles, RVs, and other vehicles. Not only do they tend to offer lower interest rates and fees, but credit unions will also pre-approve your loan before you head to the dealer. A pre-approved auto loan gives you more buying power and leverage for negotiation before signing on the dotted line.

According to the nonprofit Center for Responsible Lending, U.S. consumers who financed through a dealer paid nearly $26 Billion in hidden interest expenses over the life of their loans. Advocates specifically warned of hidden loan "acquisition fees" that can total more than $2,500 per vehicle.

Car Buying Best Practices

Sometimes, car dealers can make their offers sound great in the media or online. But there is often more—or less—than meets the eye with those catchy offers. One tactic dealer’s use is to lump unwanted extended warranties and insurance products in with the financing costs. Another is to offer a low-interest rate to seal the deal, but later claim that the initial financing "fell through" and the only way the buyer can get the car is to agree to a higher rate.

In contrast, credit unions are required to be transparent about borrowing costs. You can trust Andrews Federal to be clear about loan terms and conditions. Ready to get started? Use the Andrews Federal car loan calculator to determine how much car you can afford.

Here are a few car-buying scenarios you might find yourself in:
Scenario 1: You desperately need a car. You only have one day off of work and need to complete the whole process within 24 hours.

It's possible to visit a one-stop-shop and still avoid dealer financing. Many credit unions have "preferred dealer" programs with local dealerships. If you find a car you want to buy, simply request financing through Andrews Federal before you step foot in the financing office. The dealership will handle the paperwork, and you'll get fair terms from a lender you trust.
Scenario 2: You see an ad for a dealership that offers zero percent interest on car loans.

Buyer beware! Zero percent interest offers are typically designed to get you in the door – once you arrive, you will learn that the 0% only applies to buyers with top-tier credit scores. Even if you qualify, it might be better to finance with your credit union. You're likely to come out ahead with cash saved and excellent loan terms.
Scenario 3: A car salesman boasts offers to "shop around" to get you the best loan deal.

The reality is that dealers are not motivated to find the lowest interest rate. One way they make money is through commissions paid by various lenders. That means they constantly push you to accept a loan from a lender that pays the dealer a high commission rather than a credit union that offers the lowest possible interest rate.

Other Advantages to Financing with a Credit Union

Need a few more reasons why Andrews Federal is the best lender for your auto loan?

  • Get pre-approved before you head to the dealership so you know exactly how much you can afford. Plus, a loan pre-approval can save you the hassle and expense of financing with a dealership.
  • Low rates keep your monthly payments under control. Plus, you may qualify for an 84-month term, which gives you plenty of time to repay your auto loan.
  • You may qualify for an interest rate discount when you make automatic monthly loan payments from an Andrews Federal checking account.
  • Andrews Federal extended warranties such as Major Mechanical Protection (MMP) and GAP insurance are more affordable when compared to the dealership price.
  • A smarter car buying experience. Search, shop, and finance your new or used vehicle with the Andrews Federal online Auto Smart tool.
  • Andrews Federal is a credible name in Maryland, D.C., Virginia, and New Jersey. You deserve a financial institution you can trust.


Everyone needs a reliable way to get around. Whether you're looking to commute to work, transport the kids or explore the world, Andrews Federal offers low-cost vehicle loans that can put you in the driver's seat and get you where you want to go.

When the time comes to decide where to finance your auto loan remember, Andrews Federal can help you navigate the process and find the best possible rate.