How to Reduce the Burden of Car Financing When You Need a Vehicle
Next to a home, a vehicle is the largest purchase most people will make. The expense of a new or used car means that financing is usually necessary, but there are many ways to trim interest costs and keep your monthly payment manageable. If you’re in need of a new vehicle, consider these four tips to reduce the burden of car financing.
The best way to avoid finance costs when buying a car is to pay cash. Many dealerships and used car lots also offer special discounts for customers who pay in full. The downsides of buying a car with cash are that you may have to settle for a less expensive vehicle than what you had your eye on and it takes financial discipline to save up the money for a car. Plan ahead to ensure you have enough cash on hand when you need a new set of wheels.
Conventional wisdom says that a used car is always a better deal because the previous owner gets to cover the depreciation costs. However, a new car is cheaper to finance than a used one. Dealers usually offer much lower interest and no-interest or deferred payment incentives on their new cars for buyers with decent credit scores. Many dealers also offer free scheduled maintenance and comprehensive warranties on new vehicles.
Use Third-Party Financing
Financing through a dealer or car lot isn’t the only way to spread out your car payments over time. If you’re buying used or your credit history is murky, you may find a better deal from a bank, credit union or finance company that isn’t affiliated with the car dealer. Is your credit so in the dumps that no bank will touch you? Don’t despair. Consider a personal loan for risky borrowers or ask friends and family for help.
Do you want to avoid finance costs and enjoy a new vehicle with a lower monthly payment? Leasing is a great choice for drivers who like to have a late model car and trade every two to three years. A lease allows you to not only avoid paying loan interest but also comes with lower monthly costs and no down payment.
If you can’t fit that car payment into your budget, consider other options like ride sharing, public transportation or borrowing a vehicle until you can get your finances in order. You can also look into charities that give cars to people in need.
Meghan Belnap is a freelance writer who enjoys spending time with her family. She loves being in the outdoors and exploring new opportunities whenever they arise. Meghan finds happiness in researching new topics that help to expand her horizons. You can often find her buried in a good book or out looking for an adventure. You can connect with her on Facebook right here and Twitter right here.
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