This week's blog post is a guest post from Miles Walker from CarinsuranceComparison.Org.
The purchase of a new car is one of the biggest financial decisions most adults face, and its comparable to buying a home. The average adult cannot afford to pay for a new car upfront. If this is the case for you, it is essential that you explore your financing options. With vehicle research, this will make you prepared to wisely purchase your new wheels. The basic financing options for a new car are as follows:
Leasing a new car is similar to renting one for an extended period of time. At the end of the lease, you will not own the car, even though you have maintained, insured, and repaired it. Leasing does usually mean lower payments, still, it is mainly a good choice for business owners. It also suits someone who desires to drive a new car every few years.
Dealer financing is the most convenient and obvious choice when buying a new car. With this option, you usually visit a dealership, negotiate on a price of your chosen vehicle, and then sit down to see the rates from that various banks working with the dealership can offer. Although this way is fairly simple, consumers have to remember that dealers do not have their best interest in mind. If you are easily swayed, a dealer could quickly pressure you into agreeing to a loan that could end up costing you too much in the long run. It is always best to calculate the interest rates and monthly payments you can afford before signing a loan. Additionally, dealers tend to tack on an extra charge for finding you a loan through their crop of lenders. Try other options before dealer financing.
Getting pre-approved for a loan from a bank or similar lending source before you purchase a new car is a smart option. Generally, you can apply for these loans by phone or online. Some websites even allow you to compare interest rates so you can choose the least expensive lender. The best thing about being approved for a loan by a bank is that you can walk into a new car dealership knowing exactly how much you can afford to spend on your vehicle. This gives you an advantage over the dealer, and will avoid any dealership financing fees. Banks also tend to give more straightforward, no hassle rates.
Helpful Resources for Car Financing
Auto Loan Calculator Calculate the time necessary to pay off loans and estimate monthly payments.
Auto Financing - AWARE A helpful site dedicated to informing the car loan consumer.
Kelly Blue Book A trusted source listing the market values of vehicles.