Bank Auto Loans

Bank auto loans frequently offer more flexibility than dealership financing; however, obtaining a car loan with a bank comes with its own set of pros and cons that all car buyers should consider before determining how to finance your new or used vehicle.

What Is a Bank Auto Loan?

Simply put, a bank auto loan is a car loan that comes directly from a bank as opposed to direct financing through a dealership, some other dealership-related financial institution, or a credit union.

Pros & Cons of Bank Auto Loans

There are several pros and cons to working with banks for getting car loans; however, there is no “right" answer for everyone. Study all the possibilities to determine which financial institution is best for you.


  • Bank auto loans better prepare you; you'll walk onto the lot already knowing:
    • How much money you've been pre-approved for.
    • What your car loan rates will be.
    • Other related terms and conditions of the auto loan.
  • Often, banks are able to offer lower auto loan rates than dealerships or other financial lenders (especially if you already have a relationship with the bank).
  • Direct lending from a bank allows you to shop around with different banks for the best car loan rates.
  • There are no surprises with bank auto loans. For example, the bank looks at your credit history before offering a loan; dealerships usually hook you into buying a car before they check your credit, which means you could be disappointed if you find out your credit score isn't high enough to get you a good interest rate.

Some banks will even offer you blank check loans, which can save you the step of final authorization once you are finished negotiating with your dealer. Read our page on Blank Check Auto Loans to learn more.


  • Generally, getting auto loans from a bank means you can't take advantage of certain dealership options such as special rebates and interest rate packages.
  • Bank auto loans aren't as convenient as dealer financing because you have to visit the bank (or apply online; see below) and get the loan before heading to the dealership, whereas working with the dealership on every aspect is like one-stop shopping.
  • Typically, banks offer you one rate on car loans, whereas dealerships can shop you around to different financial lenders for the best auto loan rates.

Shopping for Bank Auto Loans

Unlike financing through the dealership, you have to shop around for bank auto loans on your own.

Fortunately, you have a couple of simple options:

  • Shop with your current bank or local area banks with which you're familiar.
    • You can call and make an appointment with a loan officer or, in many cases, simply walk in.
  • Shop for auto loans online with reputable financial institutions.
    • Learn more about shopping online for auto loans—including pros, cons, and safety precautions—in our section on Online Auto Loans.

NOTE: Always get quotes for auto loan rates from several different banks; just because one bank offers a certain interest rate doesn't mean another bank won't offer an even lower rate.

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