What is Direct and Indirect Finance?

glasses and calculator resting on insurance papers

There are a lot to consider when you’re buying a new car in Farmington Hills: loan vs. lease, finding a good interest rate, and much more. If you pt to finance, then the next phase of the car-buying process is to research your auto financing options. In this guide form the Fred Lavery Porsche Company finance center, we’ll walk you through the advantages of direct finance and indirect financing, and how the choice between a direct vs. indirect finance structure may impact your auto financing package in Rochester Hills.

Direct and Indirect Finance: What’s the Difference?

So, what’s the difference between direct vs. indirect finance methods?

  • Direct financing occurs when you apply for your auto loan through a lender, such as a financial institution or bank. One of the advantages of direct finance is that you receive your personalized loan or interest rate first — so you know your budget before you start shopping at the dealership.
  • Indirect finance occurs when you apply for loan packages through a third party lender. With this option, you’ll shop first and then apply for a loan afterwards.

Direct vs. Indirect Finance Deals: Pros and Cons

As our auto finance experts can tell you, one size doesn’t fit all when it comes to the car-buying process. So, will the advantages of direct finance or indirect finance suit your needs the best in Rochester Hills?

Direct Financing

  • Advantages — The biggest advantages of direct finance are flexibility, and the freedom to customize your finance deal. There’s no cap on the number of loans you can apply for, and working directly with your lender gives you full control over the process.
  • Disadvantages — Although you can apply wherever you want, you’ll need to do the research to determine which options best fit your needs. Plus, the direct finance process tends to take more time.

Indirect Financing

  • Advantages — Your auto dealership or financial institution can run your credit multiple times per day, and you’re able to search for multiple loan options at once. Indirect financing involves more parties than working one-on-one with your lender, but working with a team can help to speed up the process.
  • Disadvantages –Indirect financing is quicker and more convenient, but keep in mind that those benefits may cost you extra.

Explore Your Auto Finance Options with Fred Lavery Porsche Company

Further questions about planning your budget in Birmingham and Bloomfield Hills? Our experienced auto finance team is here to help you find flexible financing options, customized for your financial situation. Connect with us to learn more today!

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