Car Financing Sources

Few people can afford to pay for their car purchase in cash. Most car buyers search for an alternative way to finance their car. This article will give you information on the various car financing sources you can use in order to buy a car when you don't have the cash.

Car Loans from Local Banks

The logical choice for many car buyers is to take an auto loan from their local bank to finance the car purchase since they already have relationship with the banker. Be careful, however, when choosing this option since in many cases a local (or smaller) bank means uncompetitive rates.

Online Lending Sources

The Internet makes it very easy to compare loan terms and rates, choose the best offer and apply for a car loan. You may find extremely competitive interest rates, sometimes below the national average.

Credit Union Car Financing

Often credit unions offer much competitive rates than banks. This car financing source is convenient to use since your car payments are directly deducted from your pay. Still, many car buyers avoid using credit union financing since they prefer to have their line of credit open and easily accessible in case of an emergency, instead of tapping it for car payments.

Dealer Car Financing

Sometimes dealers have very nice car deal offers that include financing but more often dealers just don't offer the best rates. If you don't mind losing money on higher interest payments, then you can take advantage of the convenience that this option offers since you buy and finance your car at the same place. We would, however, recommend you to shop for more competitive rates before you resort to dealer financing. 

Car Loan Alternatives

For some drivers leasing is a better option than buying the car. Investigate leasing, its pros and cons, and see whether it will be better for you to lease a car rather than buy one. Read our Lease vs. Buy article to get more information on the two car financing options.

Additionally, you may consider home equity loans as a way to finance your car purchase. The advantage here is that the interest paid on such a loan may be tax deductible.

The information and interactive car payment calculators that are provided on this site are made available as general assistant guidance in regards to car loans and payments. We do not guarantee that any information or calculations will be accurate or applicable to your personal financial situation, circumstances, or objectives. Accordingly, before making any final decisions we encourage you to consult a qualified professional and get personalized advice.

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