For most of us, buying a car with cash is tough. Cars are getting more and more expensive and it’s becoming tougher to save up enough for a cash purchase and still have enough left over for our other expenses. That’s where financing can actually come in handy since for many of us cars are a necessary part of our every day lives. I commute nearly 20 miles to work every day so without a car I’d be in a lot of trouble.
There are a few options when it comes to financing an automobile but generally you’re going to want to find flexible options that give you the lowest interest rate and generous payback terms. Some of the methods listed are more traditional while others require a little thinking outside the box:
When you buy your car from a dealership, they’ll often try to sell you on their financing options. If you can score a great deal by going with their financier then go for it but a lot of the time you might be better served by finding an independent agency. Since the dealership is not really in the business of loaning money, they may not be able to offer the most competitive rates.
Since our world is becoming more and more digital, a lot of recent buyers have turned to the internet to obtain financing for an auto loan. The internet makes it very easy for shoppers to compare interest rates and fees all in one handy place. And even if your credit isn’t that stellar, you can turn to a product like bad credit car finance from Money Barn or a similar online lender in order to fulfill your financing needs.
Peer to Peer Loans
Although this is in the same realm as online lenders, peer to peer lending is different in several ways. First off, you’re essentially borrowing money from your peers(other investors) instead of a bank. That enables peer to peer lending companies to simply act as a middle man. They’ll take care of all the underwriting and all you have to do is pay back the loan. The nice thing about peer to peer loans is the rates may be much lower than a traditional loan since there are no banks involved, only people.
Friends or Family
Some people aren’t comfortable loaning or borrowing money to friends or family but I think it’s a great option. Most of the time your family won’t charge you much in the way of interest so there’s a big savings right there. Often times, family or friends may have cash sitting around earning little interest anyways so they wouldn’t be losing much or taking on much risk by loaning the money to you.
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No matter what option you end up deciding on, make sure that you have adequate means to pay the loan back. You don’t want to get stuck with a high interest auto loan no matter who you borrow from.