The Benefits of Choosing Car Finance Over a Bank Loan

How dealership financing beats the bank

Let’s face it, your car is probably one of the biggest purchases you’ll make; it’s up there with your house! It’s a large chunk of money to pay in one go, which is why so many opt to spread the monthly cost with car finance, which is something we’re always happy to help our customers with here at Avalon Motor Company.   

What is the difference between a bank loan and a car finance agreement?

A bank loan is something usually sourced by the customer themselves independent of the dealership they’re purchasing their car from, and essentially allows them to pay for the car in cash (all at once), owing the money to the bank instead of the dealership’s chosen lender. 

A car finance agreement is organised through the dealership selling the car, and allows customers to spread the cost of the car over a series of monthly payments using an initial deposit. 

These payments will either cover the full cost of the car (as is the case with Hire Purchase agreements), or just part of it, which involves deferring a ‘balloon’ payment until the end of the term, at which point it can be paid off, or you can upgrade, as is the case with Personal Contract Purchases. 

What are the benefits of choosing car finance over a bank loan?

1. Typically lower monthly repayments

Because car finance agreements are kicked off with a lump sum deposit (which is still considerably smaller than the car’s listed price), it makes the repayments generally lower than those you’d make if you borrowed the full amount of the car from the bank. 

With the cost of living crisis in full swing, many of us are on tighter monthly budgets, making smaller repayments rather appealing.  

2. A smooth, quick process 

With bank loans, you can be waiting a while for approval before you can go ahead with the purchase of the vehicle - by which point, someone might have pipped you to the post and secured the car you wanted! With dealer finance, you’ll have an immediate decision, with same-day finance possible for many customers. 

3. Better for those with bad credit 

Bank loans tend to be a little out of reach for those with a blemished credit score, but car finance deals are a way to make the car they’re after more attainable. 

Of course, finance is always subject to status, which means that the credit record of the applicant is always taken into consideration, so if it’s not looking so great, repayments could be higher, but they are at least still possible. 

4. You’re able to upgrade more often 

If you’re familiar with how Personal Contract Purchase agreements work, you’ll know that they’re a fantastic, flexible option for those that like to upgrade their cars regularly. This is why the balloon payment is built in, to allow you to move on to your next set of wheels. With a bank loan, this isn’t an option, and you may feel like you have to keep hold of the car instead of upgrading.  

5. No penalties 

When it comes to overpaying or even paying in full earlier before the end of the term, personal loans could see the bank impose penalties, whereas with car finance, this isn’t generally the case. 

6. We’ll sort it for you 

That’s the beauty of buying your next car at Avalon - we’ve been helping customers with car finance for years, so we know how to get the best deals, and how to guide you through the process with no hassle. With bank loans, you’re pretty much on your own, which, when it comes to finances, can be very daunting indeed. 

Choose car finance in Glastonbury at Avalon 

With the knowledge that you can spread the cost easily and affordably, you can concentrate on the exciting bit - choosing your next car! We’ve made it easy to filter by monthly price, so you can keep your search within your budget - get started today.