If you’re ready to turn in your old clunker for a newer model, you’ll want to look at all of your financing options carefully. No matter what your financial situation looks like, there is most likely a payment plan that will suit your needs. Yet these will come with very different interest rates, terms, and conditions.
Paying in Cash
One of the best ways to pay for a car is with your cash or savings account. No matter how low loan interest rates may be, you will still have to pay extra over time by entering into any financing agreement. You’ll save the money on interest by paying in cash. This also ensures that you own the car outright, so that when the time comes to sell you’ll benefit from the full resale value rather than turning any of it back over to the dealer. This option is usually best for used cars, so if you see a great deal on a used Jeep at Carsales you’ll want to first look closely at your savings account to see if it’s something you can immediately afford.
Next to paying for the car out of your personal stash, the next best way to finance a purchase is with a private or personal loan. If your credit is good, you can apply for a personal loan from a bank or other finance provider. You can shop around for the best rates, terms and conditions to find a plan that’s suitable for you. Benefits include the fact that these loans can often be arranged online with your current lender, and that they can cover the full cost of the car.
Personal Leasing Plan
Although you may immediately look at ways to buy a car, it’s also worth looking at the possibility of entering into a leasing agreement. With this type of financing plan, you pay the dealer a fixed monthly cost both for the use of the car as well as for the cost of servicing and maintenance. A common contract length is two years, at the end of which you would hand the car back to the dealer. If you enjoy the feeling of driving a brand new car every couple of years, this can be a great option. However, there are usually mileage limits included in the contract, so if you drive long distances regularly it could cost you quite a bit in overage fees. As with any financing option, rates will vary quite a bit so it’s important to shop around to find the best deal.
Another option is to enter into a financing agreement directly with the dealer rather than working with your own lender. These deals can be quite competitive, with a low deposit. Interest rates tend to be higher than they are with personal loans, but repayment terms are more flexible. If you want to pay your car off quickly, beware. There are usually higher fees for short-term agreements.
There’s an array of options within each of these categories, so you’ll want to do your research carefully to find the right fit. Look for a financing plan that gives you both affordable monthly payments as well as reasonable interest rates. By looking at all of your options, you’ll increase your chances of finding a financing method that best fits your lifestyle and means.