Owning a car has a lot of advantages– not only does it makes your daily commute easy and convenient, but it’s also reliable in case of an emergency. However, there are a lot of things that are involved in car ownership, from daily maintenance to getting an insurance policy. As well, prices of cars have been steadily on the rise. Data shows that the average transaction prices of new vehicles have seen a 13.5% increase from the previous year. This being the case, what can you do to finance a new car? Here are some ways to do so.
Top Ways To Finance Your Dream Car
Through a Car Lease
A car lease basically is a long-term agreement between you and the company that buys and technically owns the car. This agreement will require you to make a down payment and monthly payments on the lease. For instance, suppose you want to drive a new compact SUV, the average lease payment that you would have to pay each month is around $467. At the end of the agreement, you can decide whether you want to return the car or buy out the lease. One of the key advantages of leasing a car is that your monthly payments are more likely to be lower than when you buy a car. Moreover, some leased vehicles are also typically under a maintenance contract, so you only have to concern yourself with minor maintenance tasks like oil changes.
Through a Loan
If your goal is to have long-term ownership of a car but do not have sufficient funds for a full payment, a car loan might work best for you. There are two types of loans you can choose from, and that’s a bank loan or a credit union loan. Credit union loans tend to have lower interest rates than bank loans. For example, most credit unions have a 2.58% interest rate on a 48-month new car loan, as compared to bank loans, which have a 4.62% interest rate. However, credit unions do require you to be a member, and acquiring a membership can be tedious. Meanwhile, banks are open to any consumer that has a good credit history. They are also generally more accessible than credit unions.
Through Your Credit Card
Finally, you can also use your credit card to finance your dream car. There are various options that you can explore depending on what your local car dealerships allow, such as charging a portion of the down payment on your card or funding the entire car cost. However, there are various things that you must consider when going down this route. Your credit score, as well as the type of card you are using, can influence the amount you have to pay. For instance, those with credit scores of 579 or lower have an effective interest rate of 21.1% while those with credit scores of 720 or greater have an interest rate of only 12.7%. As such, make sure that you have a good credit standing when using your card to fund your car.
If you only look at the price tag of a car, the amount can seem daunting. However, owning your dream car isn’t impossible. There are various options for you to explore so that you can pay for your car on terms that you are comfortable with.