Cars are expensive, they just are. There is no getting around that fact, but what if you need a car to get to work or drive the kids around? You might have some options available to finance your purchase. Let’s look at some of the best ways for financing a new car purchase.
1. Leasing A Car
This is the most common way of financing a new car under $30,000. Leasing allows you to drive a new vehicle without paying for it upfront. It’s like renting with an option to purchase at the end of the lease. You can get flexible terms and low monthly payments, but be aware that this form of financing has pitfalls. If you want to own the vehicle at the end of the lease, you will have to decide whether or not it is worth it to buy out the remainder of your lease. But if you don’t feel like being responsible for a car payment after your new car purchase is paid off, this might be your best option. Just know that leasing your vehicle means you are responsible for paying the state tax on it. This is in addition to your monthly lease payment, so factor this cost in when figuring out how much car you can afford to lease.
2. Buying A Car With Cash
Do you have enough money saved up? If so, buying a new car with cash can save you thousands on interest that you would otherwise pay if you financed the purchase. Most new cars depreciate in value quickly, so it might be smart to take this route if you are planning on keeping your car for a while. When buying a used vehicle with cash, please be aware of existing bank loans or liens on the vehicle.
Buying a used car with cash is sometimes smart, but not always. You can save money on interest by paying for a vehicle in full, but you will need to pay out the nose for this privilege. Then there are safety and reliability issues as well as potential future repair bills that you will need to consider. If you are someone who likes collecting cars, this might be the best route for you. But if you drive your car for more than 6 years, chances are that it will cost more to repair than the vehicle is worth by then.
3. Getting a Secured Loan
A secured loan is a great option if you have decent credit. Most people who take out a loan like this end up purchasing a house, but the vehicle also works as collateral. This means that you can get your car paid off in less time than with an unsecured loan. You will need to make sure that the car you are buying is worth more than your loan, however.
4. Getting an Unsecured Loan
If you don’t want to use collateral like with a secured loan, then an unsecured loan might be for you. Most banks offer unsecured loans so they can benefit from interest payments on your credit card balance or other loans. You might find that you can get a better interest rate than with your car dealer by shopping around for the best interest rates yourself or looking into car financing with Driva.