Most people take out a car loan when it is time to buy a new vehicle as it may be preferable to paying out of pocket. However, not all car loans are created equally. Therefore, it may be necessary to comparison shop and look at loan offers from various sources before agreeing to borrow any money.
Dealers May Offer Financing
The dealership where you buy your car may offer their own financing options. For those who have good credit, it may be possible to get 0 percent interest or other perks that banks or credit unions won’t offer. Those who have poor credit may be given customized loan terms by a dealership that helps them qualify for a loan.
Banks and Credit Unions Provide Car Loans
If you have a relationship with a local bank or credit union, that financial institution may offer terms similar to or better than what the dealer offers. Even if you want to listen to what the dealership has to offer, you may want to get approved for a loan from your own bank before you start shopping. This lets you know what you can afford as well as what interest rate you should aim for.
Online Lenders May Offer Various Loan Options
Online lenders may be willing to give you a car loan whether you have good credit, bad credit or no credit. It may also be possible to get a personal loan that you would then use to buy a car. This may be a good idea if you prefer to have the car purchased with an unsecured loan as opposed to one secured by the car. However, you may incur higher interest rates by going this route.
Borrow Money From Family or Friends
Depending on how much the car costs, you may want to borrow money from a friend or family member. This may be preferable to having him or her cosign for the loan if you couldn’t get financed on your own. If you do decide to borrow money from another person, make sure that a loan contract is drawn up with objective and clear terms. Doing so may prevent relationships from becoming strained while it keeps you accountable for repaying the money.
If you are looking for a car loan, you don’t necessarily need to take the first offer you get from the dealer. Instead, you may want to look online, go to a local financial institution or ask a friend or relative for financing at terms that meet or come as close as possible to the ones that you are seeking.