Different Ways to Finance a New Car

If you are in the market for a new car, it is likely that you will want to finance the purchase. This allows you to limit the amount of money that you pay upfront to an affordable amount. It also allows you to keep money in your savings account or emergency fund where it can still be used to pay routine or emergency bills. What are some of the ways to finance a vehicle purchase?

Get a Loan From a Bank or Credit Union

Before you go to the dealership, it is worth your time to get financing from a bank or credit union. Even if the terms offered are not as good as those a dealer can give you, it still ensures that you have money to purchase the car with. It is important to remember that you are not obligated to accept any offer, and there is no obligation to repay a loan until all the necessary paperwork is signed.

Apply for a Loan From an Online Lender

Online lenders may be able to offer financing to those who have good, below average and subprime credit scores. They may also be more likely to work with those who have no credit score or history at all. One of the advantages of working with an online financial institution is that you can apply for a loan at any time and from anywhere in the country. If your application is approved, you will be given a check to present to the dealership.

Have the Dealer Find Your Next Lender

Dealerships tend to have relationships with a wide assortment of both local and nationwide lenders. Therefore, there is a good chance that the dealer that you are working with will be able to find at least one to approve your loan application. However, it is important to note that the salesperson who submits your application has no control over the terms that will be offered.

Have the Dealer Be Your Lender

It is possible to have the dealer be your lender and create loan terms that best fit your needs and budget. While this is a common practice among dealerships that work with subprime borrowers, those that work with individuals that have good credit may also offer custom loan terms.

For instance, a dealership may decide that it will process a loan for someone who is self-employed or not working at all. Generally, this type of person would have sufficient savings or other assets to make the deal work. A large down payment or the use of a cosigner could be required in such a situation.

Ask Family Members for Money

You could choose to eschew banks or other financial institutions in favor of asking your parents or siblings for money. This may be ideal whether you are asking for help with a down payment or to pay for the entire vehicle. By getting a loan from a family member, it may not be necessary to submit to a credit check. The repayment terms on a loan from your mom or older sister may also be more flexible.

Request an Advance on Your Next Paycheck

If you really need to get a new vehicle before your next paycheck comes in, you should consider asking for an advance on your next paycheck. Although you will essentially be working for free during a future pay period, there is no need to repay the money or pay interest on it. In lieu of asking for an advance, consider asking if your company has an employee assistance program that would help with your down payment.

Take a Loan From Your 401k

A 401k loan may be an easy way to get the money that you need with few or no questions asked. Many plan administrators allow workers to take up to $50,000 out of their account to be repaid quarterly over the next five years. The interest that you pay on the loan goes right back into your account.

Modern vehicles feature many safety features and other conveniences that make driving safer and easier than ever. Whether you only need a car to get to work, like to take long road trips or are somewhere in the middle, there are many affordable options to pay for your new car.