Your car is one of the most expensive purchases you will ever
make. Probably the only thing you will buy that costs more than
your car is your house. You wouldn't just accept the first
mortgage you came across, and likewise you shouldn't just accept
the first vehicle financing option that comes your way. You will
have a lot of options in how to finance your car.
You can buy the car outright. If you would like to opt for this,
you will need to borrow the cash in the form of a bank loan.
This should generally be medium term, over period of about two
to five years. It is generally not advised that you secure
borrowing over your home but this may be necessary in order to
get the loan or in order to get a better rate. Shop around for
the best rate, from banks, other lenders and also on the
internet. Rates will vary widely so it is a good idea to shop
around as much as possible.
If buying the car outright in this manner is not an option, you
may wish to consider leasing the car. Leasing will never make
you the owner of the car. You pay a monthly fee, every month for
the period of the lease, and at the end of this period, you give
back the car and walk away. Leases have a number of advantages
over buying the vehicle. The payments are generally lower as you
are not paying for the entire value, just for the price of
You also don't have to worry about selling the car when the
leasing period is over, as the dealer owns it. Leases may also
include a buying option at the end of the period, which will
allow you to buy the car if you want to. The one thing to be
careful about when leasing is that there may be heavy penalties
for early termination.
The other popular type of vehicle financing is dealership
financing. With this option, the car dealer arranges the car
financing. They will sometimes offer very attractive rates as
they want to encourage people to buy the cars, however,
sometimes their rates are extremely bad and you will want to be
familiar with what's available from alternative sources before
opting for dealership financing. Some advantages of dealership
financing will include convenience, multiple options, and
special offers on selected models.