If you are buying a car and want to borrow the money to pay for it, you have the options of (1) going directly to your bank or credit union and getting preapproved for a loan in a certain amount and with a certain interest rate, or (2) going to the car dealership and inquiring about dealer-arranged financing. One difference in these options is that with dealer-arranged financing the dealer may negotiate a higher interest rate with you than the bank offers, and take the additional money you pay in interest as compensation for the dealership. But if you are purchasing a new car, the car dealer may offer you lower interest rates than your bank or credit union.

In Arizona, when financing a car purchase, you have the option to either secure a loan directly from a financial institution like a bank or credit union, or to opt for dealer-arranged financing. If you choose to get preapproved for a loan from your bank or credit union, you will know the loan amount and interest rate in advance. On the other hand, with dealer-arranged financing, the dealership may negotiate the terms of the loan, which could result in a higher interest rate than what a bank might offer. The dealership might then receive the extra interest as compensation. However, it's also possible for dealerships, especially when selling new cars, to offer promotional financing that could have lower interest rates than those available from banks or credit unions. It's important to compare the total costs and terms of any financing option before making a decision.