What is Direct and Indirect Finance?

Finance Paperwork with Glasses

When you’re getting ready to buy a new car in the Covina area, you certainly have a lot of decisions to consider: Sedan vs. SUV, loan vs. lease, Polar White vs. Night Black! But one of the most important components to research is the auto financing process – and the key differences between direct vs. indirect finance. In this guide, we’ll walk you through what is direct and indirect finance and how this distinction can have a huge impact on your auto financing package in La Puenta and Glendora.

Direct vs. Indirect Finance

So, what is direct and indirect finance?

  • Direct financing occurs when you apply for your car loan directly through the lender, like a bank or a financial company. You receive your personalized loan or interest rate first, and you know what you can spend at the dealership.
  • Indirect finance occurs when you deal with loan packages through a third party lender. You apply for a loan and see what options are available to you, typically after you’ve completed your shopping process.

Advantages and Disadvantages

Our financing department knows that when it comes to auto loans, one size doesn’t fit all. So, which method suits your needs the best? Take a look at the key differences between direct vs. indirect finance:

Direct Financing

  • Advantages: The main advantages of direct finance are flexibility and customization. You can apply for as many loans as you want, you can apply before or after you shop, and you have full control over the process while working directly with your lender.
  • Disadvantages: The direct finance process takes a lot more time and though you can apply broadly, you have to do some research to determine the best options for your needs.

Indirect Financing

  • Advantages: Indirect financing may involve more parties than working directly with a lender, but having a team can speed up the process. Your dealer or lender can run your credit multiple times per day and you can search for multiple loan opportunities at once.
  • Disadvantages: You might pay extra for the convenience and speed of the indirect financing process, so consider whether the tradeoff is worthwhile.

Find Out More with Mercedes-Benz of West Covina

You’ve read the basics of direct vs. indirect finance, but if you still have questions, feel free to contact us at Mercedes-Benz of West Covina. We’re happy to help West Covina customers find flexible and adaptable solutions to any financial situation, so don’t hesitate to reach out!

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2010 East Garvey Avenue South • West Covina, CA 91791

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Mercedes-Benz of West Covina 34.071008, -117.902525.