The downside to revolving financing is simply that it is an unsecured loan, and, as such, uses more stringent criteria in regard to the approval process. Frequently the amounts approved in revolving accounts are lower than those involved in closed-end financing. If your credit history is suspect, and you've been turned down for revolving financing, it might be in your best interest to inquire about closed-end financing from the dealer. Closed-end financing is analagous to a car loan. Just like revolving financing, closed-end loans require a credit application and a TRW report is pulled.
Every purchase made with closed-end financing requires a new application and contract.
Large purchases made on closed-end contracts can often be set up on 48 or 60 month terms, which may result in a lower minimum monthly payment than a revolving account. The downside to closed-end financing lies in its lack of flexibility. Each new purchase requires a separate contract, and interest is prefigured as a percentage of the monthly payment. The good thing about closed-end financing is that the contract is secured by the merchandise purchased, like a car loan. This means that credit criteria are more flexible in matters pertaining to approvals and amounts.