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 Ohio, when purchasing a car and considering financing options, you have two primary choices. First, you can obtain preapproval for an auto loan from a bank or credit union. This preapproval will specify the loan amount and interest rate you qualify for based on your creditworthiness. Second, you can opt for dealer-arranged financing at the car dealership. Dealerships may offer financing through their own network of lenders. While dealer-arranged financing can sometimes result in a higher interest rate, with the dealer potentially earning compensation from the additional interest paid, it can also offer competitive or even lower rates, especially for new car purchases, as part of promotional offers. It's important to compare the terms and total costs of both options before making a decision. Ohio consumers are protected by both state and federal consumer protection laws, which require clear disclosure of financing terms and rates.