Car Finance – the basic options

Arranging financing for a car is one of those financial minefields that can quite easily blow up in your face, there are two basic choices, put time and effort into looking at all the options in order to get the best deal and save money or go with the dealer option (which may well be the best option) and spend the next few days / months / years wondering if you could have managed a better deal.

Like in all financial dealings the more you know the better, if you have the time to spend, so here comes the breakdown of the basic methods of car finance

1) Get a bank loan.

This may seem obvious, but using a bank personal loan should mean that there is less paperwork to go through as your bank already knows you. That should mean a quick (ish) approval and most importantly when you go to the dealer you will be a cash buyer. Dealers should be happy to see you if you have cash, that will translate into a better deal, discounts, maybe a price reduction or possibly an added feature or two.

2) Dealer financing.

Some dealers will offer financing through an approved company, the paperwork and credit checks will be more in-depth than a bank loan because the dealer doesn’t know you. So be prepared to deal with detailed requests about your finances.

3) Dealer leasing.

This tends to be the cheapest option but you are effectively renting the car from the car company, that means there will be restrictions on how you can use the car, how many miles you can travel and the like. The upside is that you get a new car relatively cheaply that can be returned at any time, if you are leasing as s business then there are positive tax implications to leasing, in that the car isn’t a asset, write-offs against etcetera.

The key to feeling good about your new car is to be comfortable with the finance deal whatever you decide upon and that really stems from knowing you got the best possible deal.

Do your homework and enjoy the savings.