What is Direct and Indirect Finance of an Auto Loan?

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We understand. Auto loans can be confusing. One of the things that seems to confuse some of our Phoenix customers is the whole debate over direct vs. indirect finance. What is direct vs. indirect finance? Indirect finance occurs when a third party brokers a loan for you. Our Finance Department is here to help. So, we’ll explain below the advantages of direct finance, as well as the advantages of indirect finance.


What is Direct and Indirect Finance?

So, what is direct and indirect finance, exactly? Direct financing occurs when you borrow money directly from another person or, for example, from a Glendale area bank to buy a car. In either case, you would be getting financing directly from the lender. On the other hand, indirect finance occurs when you go through a dealership for financing. In this case, the dealer applies for loans on your behalf.

Direct vs Indirect Finance – Benefits of Direct Financing

Direct financing gives you more control of your loan. Here are some of the advantages of direct financing:

  • More flexibility. You can apply for as many loans as you want, before or after you pick out a car.
  • More control. You know exactly which lender you’re dealing with when you opt for direct financing.

Direct vs. Indirect Finance – Benefits of Indirect Financing

Indirect financing opens up a multitude of possibilities that just aren’t available with indirect financing. Here are some of the advantages of indirect financing.

  • Access to more lenders. Your dealer generally has access to more lenders than you do, which puts them in a better position to find the best terms for you.
  • More convenient. Instead of going to every bank in the greater Glendale area to find the best interest rate, you can let your dealer apply to multiple lenders quickly.
  • Less time. Direct financing takes longer than letting your dealer do it for you.

Talk to the Friendly Finance Managers at Rocky's Auto Credit

Our Finance Team will be happy to sit down with you and walk you through your options. We make the loan process easy. You can even apply for financing online. We’re a short drive away from Tempe, and we’re also just a phone call away. So, drop by or contact us today!

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