Finance a Car the Smart Way

Few people can afford to pay for a car by simply writing a cheque or paying cash, especially a brand new car. Even a few thousand dollars can be hard to come up with on the spot. This means you need to get a loan of some kind. Are you familiar with APR and 0% financing? Have you examined potential loan arrangements ahead of time? If not, then familiarize yourself with the negative and positive aspects of each institution that will gladly help you finance a car.

The reason they will be so glad is that this is how they make money, whether you are dealing with the automotive salesman, your bank, a private institution, or an online business. Going to your bank for a loan is probably the most sensible option to take. For one thing, they have a vested interest in keeping your business if you already hold accounts there. They are heavily regulated to protect customers. You probably have a business relationship with at least one individual here, thanks to your mortgage or commercial transactions. Perhaps you trust this individual and can work directly with him to secure your loan. In this case, he can discuss your potential car purchase with honesty, exposing anything that looks suspicious about the deal in his professional opinion.

It is not that car dealers are necessarily going to pull the wool over your eyes, but some deals sound better at first than they actually turn out to be. There is no lying involved, just a certain amount of sweet talking. A dealer is likely to try and have you sign a financing deal with him right there at the car lot. If he does, then you are going to feel pressured. You just want to drive off the lot with your brand new (or lightly used) vehicle, not sit around reading small print. The thing is you need to read that tiny printing and be aware of interest rates, penalties and any extra fees.

Some people will go with online financing companies, and this can be a highly convenient way to finance a car purchase if you have no credit history or your rating is poor. Take care, however, to establish the credentials of any financial institution. If the rates look too good to be true, they are probably unreliable. Whichever route you take has to be one you can live with for many months.