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 West Virginia (WV), when purchasing a car, you have the option to secure financing either through a direct loan from a bank or credit union or through dealer-arranged financing. If you opt for a direct loan, you can get preapproved for a specific loan amount and interest rate before you go car shopping. This preapproval gives you the advantage of knowing your financial limits and the cost of borrowing upfront. On the other hand, dealer-arranged financing involves the car dealership facilitating the loan process. Dealers may have relationships with multiple lenders and can offer a variety of loan options. However, it's important to note that dealerships might negotiate a higher interest rate than what you might get directly from a bank or credit union. The difference in the interest rate can serve as compensation to the dealership. For new car purchases, dealerships sometimes offer promotional financing with lower interest rates as an incentive, which could be more competitive than traditional bank financing. Regardless of the financing option you choose, it's crucial to compare the terms and conditions of the loan, including the interest rate, fees, and total cost of borrowing, to ensure you are getting the best deal possible.