The best way to finance a new car usually depends on your financial situation, however there are a lot of options available for you. People want the best possible price, a low down payment, and a comfortable monthly bill when purchasing a new vehicle and dealers can take care of that for you.
Car sales are hot but one of the biggest mistakes people make in when buying a new car is forgetting to include the cost of auto financing in the total price. If you won’t check out the finance part of the process may result you in paying more for that new car in the end.
For you to have an idea of your options available, here are different ways to finance a new car:
- Dealer Financing. This type of financing is convenient and often full of incentives. Be careful, as these incentives could be marketing tools to entice you into financing through the dealer. Auto dealers can actually make more money on the financing than the actual profit of the car and you’re the one paying the premium. Research, bring a calculate the expenses and read all documents before you sign and don’t be afraid to ask questions when something doesn’t make sense.
- Bank Financing. Financing a new car through your bank is pretty straightforward. You know exactly what you are borrowing and how much you’ll end up paying at the end of the loan. There are no gimmicks and you can get pre-approved for a certain amount before you go to the dealer. You could end up with a slightly higher payment but will usually pay less in the long run. The bank is only interested in getting back the money at the agreed interest rate and not in making extra profit.
- Refinancing a car loan. If your credit is good and your car isn’t too old, you should be able to refinance your car loan just like you can refinance a mortgage. It’s easy to get auto loan refinancing quotes. You can get a title loan estimate online. You can get the pre-approval process started through the comfort of your own home.
- Paying cash. This is ideal – the new car is all yours, immediately. This is a viable option but if interest rates are super low, you may be better off investing the cash instead. For those who doesn’t want a car payment for several years and would feel better about owning a car outright, that’s perfectly fine. Just don’t clean out all your savings to do it. You’ll end up paying penalties and fees that may be as much as what you’re saving by not getting a loan instead.
Remember to always do your research, shop around and compare insurance quotes once you have the car – putting in a little extra effort could save you hundreds over the lifetime of the car.
Love Counting My Pennies?
Sign up to get our latest content by email.