Question

If you wanted to finance a new car, would you apply to a finance company or a commercial bank? What are the advantages and disadvantages of either choice?

Answer 1

Financing from a finance company, can be applied to many ones, but
commercial bank car loan can only be applied to a single one.
The main difference between both kind of finance is:
FINANCE COMPANY	COMMERCIAL BANK
Lower interest rates	Choice between various rates schemes.
Commission of salesman makes interest rate up.	No salesman commission involved.
Finance terms typically for 3 years.	Choice of tenure 1-7 years
Down payment is essential	No case of down payment
Benefits:
Less paper work	Good amount of formalities
Choice between various financers	Choice between various interest rates terms
Negotiation of price exists	Negotiation between loan terms exists.
Drawbacks:
Eligibility of good credit	Car mortgage
Schemes available with costly cars	Schemes for all classes of cars.
Down payment essential	Higher interest rates to other finances.
DECISION:
Of the finance co. and commercial bank, the loan from the commercial bank is more
appropriate because of longer loan tenure which makes the EMI a small one, which
is more acceptable by middle level income car seakers. Also, no down payment is
essential so more appreciated than other finance companies.