Auto Financing Options

When you have made the decision to purchase a new car there are a lot of financing options that will be available to you. It is important to give the proper consideration to each of these options to make sure that you find the financing option that will work best for you and your budget.

A few of the options available to you include the following:

A loan through a lender working with the car dealer
A loan through your local savings and loan or bank
A loan through your credit union

Naturally, each of these options offers different advantages and different advantages. Be sure to consider the benefits and drawbacks of each so that you can make an informed and educated decision regarding your next car loan.

If you opt for a loan through a lender working with the car dealer it can be much more convenient and faster than waiting to work out a loan through your local savings and loan. This can be particularly helpful if you are shopping for a car on the weekend or after normal banking hours. This can prevent you from having to wait until your bank or S&L is open. One of the disadvantages of this type of loan; however, is that you may need to pay a higher interest rate than you would normally pay through your savings and loan or bank.

With your local savings and loan or bank you may be able to get a better interest rate depending on your credit score and history. As previously mentioned the disadvantage of this option; however, is that you may not be able to take care of the financing on your new car purchase immediately.

A credit union also typically offers better interest rates than a regular bank or lender through the dealer; however, most credit unions require membership in order to take advantage of this benefit. Depending on your level of qualification, you may be able to qualify for up to 100% financing. Keep in mind, this is typically only available to qualified members. Finally, the credit union may or may not be able at the time you are making your car purchase.

Besides the interest rate and the time at which you can handling the financing there are also other matters that should be taken into consideration regarding your financing options. One of these options is the amount of down payment required. Depending on what kind of terms you can work out with the dealer regarding a trade-in value on your existing vehicle you may be able to also work out a lower down payment with the dealer’s lender, but that’s not always the case, so always be sure to check and consider this carefully.

You will also want to make sure you find out information regarding the pay back terms of the loan, what kinds of fees are associated with the processing of the loan and, of course, the monthly payment.

Ideally, it is best to make sure you have obtained pre-approval for your new car auto loan before you actually begin shopping. This allows you to know exactly how much money you can spend and actually puts you in a better bargaining position with the dealer. You can generally obtain pre-approval from your local bank as well as credit unions and whatever lender your dealer works with.
By taking the time to do your homework, understand the advantages and disadvantages offered by all your financing options you will be in a better position to obtain the best deal possible when you’re ready to purchase your next new car.