Car financing offers someone the opportunity to own a vehicle. There are several ways that you can obtain car financing. Even if you have a bad credit score, you still have options. If you're looking into getting a new car but are not sure how to go about financing the car, there are several different ways to finance a vehicle.
Through the dealership This type of financing involves forming an agreement between the dealer and the buyer. The buyer is asked to put a down payment of anywhere between 10-20% of the total price of the car. The monthly payments are then calculated based on the balance left owing on the car. When you finance your car this way, the car is not completely owned by the buyer until the balance is paid off. Interest free financing is usually offered with new cars only.
Personal Loan This method of financing is the most popular because ultimately the buyer is able to borrow money from any institution of their choice and completely pay off the car. This also allows the buyer the freedom to sell the car or trade in the car for another as they now own the vehicle.
Home Equity Loans This type of financing is designed for homeowners as you're tying in your car to your home. Equity is the difference between your home's value and the balance on your mortgage loan. So if your home is worth $200K and your mortgage is $150K then you have $50K worth of equity in your home that you can leverage against. This is a very popular method to get a big chunk of credit because of its low interest rates.
The first rule to financing a car is simple. Buy a car that fits your budget. You should understand your cash flow and the reason you're buying your car. If you're buying your car for business then car leasing may be an option for you. You should also be aware of hidden car costs like insurance, gas and parking. Always take these extra car costs into consideration when buying a car so that you can avoid any surprises.
A good tip to remember is that an informed buyer will almost always get the best deal. For more valuable information and tips visit www.facebook.com/prudentvaluecars