Financing on your own at a bank or credit union is slightly more hassle in the sense that you can only deal with them during business hours. They'll generally be more honest with you, and won't talk your ears off about extras you don't want. Bank loans will be simply that, loans with a bit of interest tacked on.
Financing Through Dealers
Dealers are out to pull one over you. Always remember that. However, it is true that on occasion you will find a competitive rate through financing with a dealership.
Don't fall for sweet rebate talk. Rebates are usually offered by the manufacturers, not the dealerships. So dealers aren't really losing anything if you wish to buy a car that has a rebate offered.
The Finance and Insurance departments at dealerships are often a bigger profit center than the sales department. Sometimes the dealerships will have some sort of agreement with local banks, so it's important to have researched matters beforehand. Easy method, call and ask.
The business manager of the finance department can take the lowest approved interest rate on your contract and mark it up. Since the dealer himself is not actually marking anything up after agreeing on a car price with you, it isn't illegal, and the dealer is not legally bound to tell you that there will be a mark up. Think of this as a separate transaction, and more importantly, it is negotiable in its own right. Don't put your name on anything until you feel comfortable that the final numbers have been filled out correctly.
If you are one of the very few wanting to pay cash for a vehicle and the dealer insists on running a credit check, head for the door and don't look backeven if they change their tune. If you can pay in cash, then there is no reason for a dealer to run a credit check on you. Every time you run a check, your credit score gets lowered.
A major thing to watch out for when financing through a dealer is spot delivery. Spot delivery allows you to drive the car home immediately after the down payment. The dealer will have told you what the monthly payment is. But you'll sense something odd in the fact that you haven't signed a contract yet.
This is for good reason. A phone call from the dealer will arrive, saying that the financing they thought you would get didn't happen; of course, they knew it wouldn't happen all along. You will then have to either return the car or sign a new contract with a higher monthly payment, and maybe even a larger down payment. Beware the words subject to financing on your contract.
Additional Dealer Markups (ADM) are hefty charges including asinine things like rust proofing, undercoating, VIN etching etc. If you're buying a new vehicle, then it has already been rust proofed and undercoated, and the dealership doing it again won't make a difference. The rest of the services they offer are overpriced; there are other venues where you can get the same work done for a lot cheaper.