You’ve found the perfect car and decided it’s time to take the plunge and buy it. But now you’re faced with how to finance it.

Car dealerships want to make it as easy as possible to get the financing you need, which is where dealership financing comes in. There are a few options when it comes to financing. Here’s a look at what you need to know.

Dealership Indirect Financing

Indirect dealership financing is when the lender provides the financing to the dealership instead of the buyer. The dealership then passes the financing on to the buyer, who makes their monthly payments to the lender. In other words, the dealership works as a middleman to help negotiate the terms of your loan. Car dealerships often have relationships with several local and national lenders and work with them on a regular basis.

The benefit of indirect dealership financing is you don’t have to do the legwork to find a loan. The dealership financing department will do it for you. You don’t have to shop around for the best terms because they do it for you. The downside is you don’t get to choose the lender.

In-House Financing

In-house financing is when car dealerships serve as the lender. Buy here, pay here is a type of in-house financing. The benefit of this type of financing is there is a credit check is not always done, so you can get a loan even if you have bad credit. In-house financing is quick. You don’t have to wait for an approval from a bank or credit union, but the downside is you pay for the convenience by way of high interest rates.

Leasing is a Type of Financing Too

Car dealerships offer leasing options for buyers who want to save on their monthly payments. Leasing is essentially a long-term rental, where you pay a monthly lease payment for the use of the car for a set amount of time. Leases usually last for two or three years, and the monthly payments are significantly lower than a loan payment.

A lease is not for everyone. You’ll probably want to consider any mileage restrictions, because if you drive over the allotted number of miles, you’ll have to pay a fee at the end of your lease. Leasing is a good option if you don’t want to head out on a road trip every weekend, and if you like the idea of a new car every few years. If you like new technology and the latest features and like the idea of upgrading your vehicle, consider leasing instead of buying.

When you buy a car, your best bet is to do your research before you head to the dealership. Find out your credit score and fix any problems before you apply for a loan. This puts you in a position to negotiate the best possible terms, so you drive away in a new or used car with a payment you feel comfortable with.