Finance Your New Car: Here are Some Options

car prototypeYou want to buy a new car, but do you have the money to do it?

Let’s face it–purchasing a car in cold, hard cash is not readily achievable, and therefore, almost never the first option when looking to buy one. Unless you can comfortably shell out huge sums of money in just one purchase, you might want to consider these other financing options instead. In this article, we will talk about the two main options for financing your nec car: (1) direct lending, and (2) dealership financing.

Direct Lending

This car financing option involves seeking out a bank, finance company, or credit union to directly get a loan from. You, then, use the loan to purchase your vehicle of choice. In these cases, you are required to settle the loan along with relevant finance charges over a designated period of time. The advantages you get from this financing option include: (1) the freedom to compare and inquire about loans and credit terms from a number of lenders before coming up with a decision, and (2) knowing your rates and credit terms in advance.

The terms of direct lending vary depending on where you get your loan from. For people with excellent credit rating, you may opt to apply for an auto loan from a local bank. Meanwhile, if you’re a member of a credit union, you can easily obtain a loan from them. This will certainly work to your advantage, given that credit union loans are known for giving the best interest rates. You can also obtain car title loansas an additional direct lending option.

Dealership Financing

You may notice that whenever you come up to a car dealership, it won’t take long until someone asks you the “important questions”, such as how much you are willing to spend, and how you plan to pay for a new car. This is a rather common car financing option. Dealership financing entails you working together with a car dealer or agent, discussing credit terms, and finally entering into a contract. This contract is often sold to an assignee–a bank, credit union or finance company which manages the account and comes to collect payments.

The good thing about this type of car financing is that it offers convenience. You purchase your car and do your financing in a set place where the working hours are much more flexible. Moreover, car dealerships often have relationships with finance companies and banks, offering a wider range of options and deals you can take advantage of. Some car dealerships even have special programs such as manufacturer sponsorships and incentive programs for qualified buyers. Special requirements for these programs include excellent credit rating, shorter length of contract, and a larger down payment. If you think you can present all of these requirements, then this would most likely be your best financing option.


No matter which option you choose, it is crucial that you comply with the provided terms and conditions. You don’t want to get yourself into a lawsuit while struggling with a bad credit history.

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