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 Oregon, when financing a car purchase, you have two primary options: obtaining a loan from a bank or credit union, or opting for dealer-arranged financing. If you choose to get preapproved for a loan from a bank or credit union, you'll know the loan amount and interest rate in advance. This can provide leverage when negotiating the price of the car and can help you stay within your budget. On the other hand, dealer-arranged financing might offer convenience, as dealerships can submit your application to multiple lenders. However, dealers may also mark up the interest rate above what the lender charges to compensate themselves. This means you could end up paying a higher interest rate than you would with a bank or credit union. Conversely, dealerships sometimes offer promotional financing with lower interest rates, especially for new cars, which can be more competitive than traditional bank rates. It's important to compare the total costs and terms of any financing offer and consider negotiating the terms of dealer financing just as you would the price of the vehicle.