Finance Options on a Car

When buying a car you are really only faced with three different options for finance on a car. You can buy the car with cash, you can lease the car or you can finance the car. Each option has its advantages and disadvantages and selecting the one that is right for you can be confusing. Lets take a closer look at each and hopefully with our assistance we can help you decide.

Buying the car outright is easy, once you negotiate the price, pay for the car and fill out the paperwork you can take it home. You won't have to worry about interest rates and down payments. The price of the car is clearly determined ahead of time with no hidden fees. This is the best option when buying a car but many people cannot afford it. Third-party lenders and banks may approve automobile loans affording you this option and you will still have to make payments, but these will be to your bank and not the dealership or a car finance company. You will have to fill out a credit application and be approved prior to buying the car. Also, you may be required to have a concrete idea of what vehicle you are looking at ahead of time to satisfy the lender.

Leasing a car is similar to financing. You will have to fill out a credit application. Your credit, the type of car you are looking for, how much you can afford to put down and other factors will help decide what lease terms you qualify for. After qualifying, you will put your money down (typically when leasing it is best to put as little down as possible) and decide how long of a lease you want (typically three years is best). You can negotiate mileage terms, but increasing yearly mileage may increase your monthly payments. Once your lease is finished you will have the option to purchase the car, or return it.

Like leasing, you will be required to fill out a credit application and be approved for a loan. When financing a car you will be required to go through the dealerships lending company. This option requires you to make a few decisions, namely the length of the loan and how much money you intend to put down. Your down payment will factor into the interest rate you qualify for and together with the length of the loan, your monthly payment. You may qualify for several different terms depending on the factors listed above. It is usually best to put down as much money as you can afford when financing a vehicle. This not only helps ensure cheaper monthly payments but also keeps the interest rate low. Dealerships also prefer you put down as much money as possible when buying a car.