The Best Ways to Finance a Car Purchase

Couple looking at a new car

A car is a costly but worthwhile purchase. You’ll have to think hard about which car suits your needs and preferences. But choosing the right car for you is only half the battle, the next big decision you’ll have to make is figuring out how to finance your purchase. The smartest choice would be to pay the entire cost of the car up front, but most people will have difficulty doing that. Thankfully, there are plenty of alternative financing options to choose from.

Auto Loans

An auto loan is a specialized loan that accepts a vehicle as collateral, allowing lenders to set a low-interest rate. If you default on payments, the vehicle may be seized to recover the loan. These can be structured to include a balloon payment or can involve train-ins and deposits to reduce the amount. You can find plenty of auto loans in Wichita Falls with reasonable interest rates and source them from different places, such as:

  • Through a bank: This is often the easiest and quickest car financing route to take as you most likely have an account in a bank. Banks also have the lowest interest rates and fastest approval processes. You’ll have to make sure that you have a good credit rating though, otherwise, it will take much longer to get approved.
  • Through cooperatives or credit unions: These nonprofit financial institutions offer more competitive rates compared to banks. However, you’ll need to be a member of one before you get approved for the car loans that they offer. They aren’t as strict when it comes to credit scores or even failing credit ratings though.
  • Through a lease: With a car lease, the lender buys the car then leases it to you, the borrower. You’ll have to pay the lender a fixed monthly payment and you’re also responsible for any repairs or maintenance that the car may need during the period of the lease. When your lease term expires, you have the option to return, refinance, or buy the car by paying the amount left over.
  • Through a dealership: These loans are sourced directly from dealerships for the cars that they offer. Although you can get approved for one quickly without the need for lots of paperwork, they do tend to charge the highest interest.

Mortgages

Mortgages are a good option if you already have one since the interest rate on your home loan is much lower than most car loans. All you need to do is restructure your existing loan to avoid the work that comes with applying for a new loan.

Credit Card

Car salesman showing car features to client

If you’ve got a high credit limit, it’s possible for you to buy a car using your credit card. Many cards allow zero-percent interest on purchases for a certain period of time, so if you’re able to pay up during that period, you might be able to avoid paying interest completely. Not all dealers are willing to accept this mode of financing though, and they could impose fees if they do.

Can’t cough up the cash for a car? No worries. These financing options can help you purchase the car of your dreams.

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