Guide to Buying a Car Chapter: 1 2 3 4 5
Financing: Where will you turn?
Once you've found a monthly car payment amount that you're comfortable with, set your sights on financing. If you don't have the cash on-hand to buy outright, consider these options:
Once you've found a monthly car payment amount that you're comfortable with, set your sights on financing. If you don't have the cash on-hand to buy outright, consider these options:
Table of Content
- 1. A New Set of Wheels
- 2. Financing: Where will you turn?
- 3. Used or New?
- 4. Buy or Lease?
- 5. Choosing the Car
1. Home equity. Since homes and cars are usually the largest single purchase most people make, it's not surprising that some smart consumers use one to acquire the other by taking out a second mortgage to buy a car. Because the interest on a home loan is generally tax-deductible, many use either a fixed-rate home equity loan, or a home equity line of credit (HELOC) to finance their wheels. A bank or a credit union can provide you with the loan, assuming you have enough equity in your home.
2. Bank loan. Another popular choice is a standard car loan. Credit unions tend to have the best rates, but banks can be equally competitive. Don't limit yourself to local lenders, however. Drive down the information superhighway; the Internet is a great vehicle for finding good deals.
3. Car dealer financing. Opt for this choice only if you have problems getting a home equity or bank loan. Financing through a dealership will generally involve higher rates and more fees.
Borrow from reputable lending institutions at competitive rates. If you don't qualify because of a tainted credit past, consider rewriting history and wait on that new car until you've got your finances back in shape.
Next to a home mortgage, a car is one the biggest purchases you can make. Take your time and shop various lenders before you make a decision. Understand the fees and the interest rate you'll be paying. Haste will make waste of your bank account if you're not careful. Be comfortable with your financing before you sign on the dotted line.
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