Pre-approval or dealer financing: how to compare the two

The cheapest loan is usually the one where two lenders compete. Here is how to make that happen without hurting your credit.

Start with your own bank

Ask your bank or credit union for a pre-approval before you shop. It tells you your rate and your ceiling, and it gives you a number to beat.

Compare on the same term

A lower payment over 72 months can cost more than a higher one over 60. Compare the APR and the total cost on the same term, not the monthly payment.

Watch for add-ons

A service contract or GAP coverage can be worth having, but each should be its own line on the sheet. If the payment grew and nobody explained why, ask.