An auto dealer may be willing to offer you a higher loan amount than a bank, credit union, or other lender.

One reason is that the dealer has a strong incentive to sell cars, so it may offer a higher loan amount to increase the chance that you will buy the car. Also, many dealers end up selling loans to other lenders or companies, so they may not have as much risk if you don’t pay back the loan as other types of lenders. And manufacturers may offer incentives to financing sources that result in your qualifying for a larger loan amount.  

No matter what type of financing you are considering, you are not required to borrower the maximum amount available. Just because a lender or dealer says you can afford a particular monthly payment or qualify for a particular loan amount doesn’t mean that you can or should borrow that amount.

Always determine your needs and budget for yourself. Be sure to include total estimated vehicle expenses such as taxes, insurance, maintenance, gas, and annual registration to figure out how large a car loan you can afford. And if you’re not sure how to calculate your monthly budget yourself, seek help from a local non-profit credit counselor.