Five Auto Financing Options You Should Consider

new car sales

No one loves shopping for a new vehicle. I despise it, myself. I dislike the pushy sales people, the sales talk, the sitting, the driving, the looking at different vehicles that look exactly the same to me. The last time I purchased a vehicle was last year, and it was stressful. I put it off so long because I liked the car I already drove. It was a sporty little BMW sedan that fit my lifestyle and my two little girls and husband with ease. However, in February 2014 I was 32 weeks pregnant with twins and my little Beemer sedan was not going to cut it. I put it off and put it off and put it off for months, but I was down to the wire and had no choice. Twins can come at any time, you know, and they usually do come early.

My husband and I set aside a weekend to go look at giant SUVs for me, and the kids took a trip to grandma and grandpa’s for the weekend. We went looking at cars. The first place we went where I’d found a couple I was relatively interested in, we left after five minutes. The salesperson wanted me to go ahead and look at this and that and was adamant that a giant SUV is not really what I wanted; I wanted a minivan. I told him three times that no, I did not want a minivan. However, he has kids of his own and he ‘knows’ I want a minivan.

We left.

I did not want a minivan.

The second place we went was just as bad. I had three people on top of me before I even got out of the car, and two more stop me on the way to the ladies room. Now, I don’t know if you’ve ever been pregnant with twins but when you require the ladies room, it’s not a sight-seeing trip that involves a scenic detour. You need it five minutes ago, and most of the time you don’t know you need it five minutes ago until it is far too late. When two people stopped me inside the building on my way to the ladies room and asked me to give them a second before I went it, I knew we’d be leaving right away. Well, as soon as I used the ladies room.

We went home. I was tired. I hurt. I was stressed out about the sheer stupidity of humanity and I wanted to get away from the general public as quickly as possible.

That’s when we decided to look online at a dealership that a friend told us about; one that specializes in the type of vehicles we were looking out – luxury vehicles a model year or two old with low mileage, pristine condition, no dealer fees and no haggling. What you see is what you get; what you pay is what you get. I was shocked to see that the car I liked the most (a Buick Enclave) was less expensive there than anywhere we’d looked already, and it had more options. I was firm on needing both a dual sunroof, leather seats and a rear entertainment package. Those are things I will not drive without. However, we were having the most ridiculous time finding year old SUVs (I mean, really, year old – we don’t like to take that depreciation) with all three. I was worried I’d have to choose two and then buy after market DVD players.

This vehicle had all three, and it was less expensive and in pristine condition and had no miles on it – by no, I mean less than a few thousand. We called to see if they still had it; they did. We already had our financing lined up with our credit union. We went in, the salesperson came out and asked if we were the Enclave-looking couple, he offered us $1,000 more than what we thought we might get for the BMW and he gave us the keys and told us to have fun. We came back, I said I wanted the vehicle, and we went to lunch, came back and it took less than 10 minutes to go through the paperwork, sign it and be on our way home. I will never, ever purchase a vehicle at a different location ever again.

What I liked most about this location, aside from the fact that they weren’t obnoxious or annoying in any way, was that they were fine with me bringing in my own financing from my credit union. They never once asked me to use their financing or told me I could get an amazing deal doing this or that. We like to finance with our credit union and then work on paying off our vehicles as quickly as possible over the course of the coming months. It works for us; and it’s what we prefer. But still, financing is even worse than sales people, and sales people are bad.

Financing an automobile is a stressful subject. Good thing is that there are bad credit car financing dealership services you can consult for help. Cars, unlike homes and land, are not investments. The moment you drive off the lot in a new car, it loses a large chunk of its value leaving you upside down on your payments driving a car that is not worth as much as you owe on it; that is not a wise situation in which to find yourself. Even if you choose a slightly used vehicle, however, you’re still going to find that your car depreciates in value and becomes less ‘worthy’ than what you owe, leaving you in a situation that’s not always comfortable.

The difficulty in this situation is that not everyone has enough cash just lying around to go out and pay cash for a new car. Even if you do have a little cash lying around, buying a car that’s not worth very much in the first place is unreliable, unsafe and usually not wise in terms of your insurance and your own abilities to get to and from work, school and anywhere else you need to be. Without reliable transport, the world becomes a much more difficult place. You need transportation to get to and from work to pay for your vehicle, but you cannot get to work to pay for your vehicle if it is one that is in the shop half the time.

There are so many considerations to make when it comes to financing a new ride that many people work hard to avoid it at all. Most car buyers take the easy way out when it comes to financing; allowing the dealer to do the work for them. That’s fine and dandy if that’s what you want, but there are other options when it comes to auto financing that you should consider.

Use the Dealer’s Financing Options

You see them all the time on television; finance with us and you can get this rate and put nothing down and drive away with the brand new car of your dreams and all those pretty little nuances. You see that, you decide that’s fine with you and you decide that the convenience of dealer financing is fine with you. Millions of people do it. Here’s how it works: You go into a dealership and you provide a credit application to the dealer. They will then use that application to determine whether or not you qualify for a new car loan through them, how much you qualify for and the terms. They then show you the acceptance, you negotiate the price of the car, you then either provide a down payment or you don’t, you sign the paperwork and you go home with your new car. It’s very easy and it’s very convenient. And it’s one of the worst ways in which to finance a vehicle. However, people love it and do it all the time.

  • It’s convenient because you can do this at night or on the weekends when banks and credit unions are closed rather than waiting to finance your vehicle
  • It’s convenient because all you do is fill out a credit application and someone else does the work for you
  • It’s convenient because it works right away

You might find that it’s more convenient to use this method of auto financing, but it’s usually not the best option. Many dealerships do not offer competitive rates, they do not offer the lowest rates and they offer you terms that are not always the most financially wise. That’s why we don’t recommend this as your first and most amazing way of financing a new vehicle.

Bring In Big Bank Financing

Another way to finance your new vehicle is to bring in big bank financing. This means applying for a loan for an auto through a bank such as Bank of America or some other huge bank that’s known all over the country. You can secure a loan by applying in person or online, and all you have to do is provide the general idea of the vehicle you want such as a new SUV in this price range with this many miles and so on and so forth. The bank will approve you for the loan if your credit qualifies you, and they will issue you a check so that you can go out and get your new car.

This is a good option for many because it allows you to work like a cash buyer when you walk into a dealership. You have a guarantee from a bank that you can buy a vehicle, so you tell the dealer what you want and they find it, provide you with the final number and you present them with a check made out to them from the bank you chose with the amount due for the new vehicle. This is an option that works well for many people since it is one that typically comes with lower rates and cheaper payments. You also don’t have to negotiate with them over terms and conditions, monthly payments and other issues that often come up when you are buying a new car.

Finance Through Your Credit Union

Credit unions are often the best. They are like banks in that you keep your money there and you form a relationship with the people that work there – provided you don’t do all your banking online or anything. When it is time to buy a new vehicle and finance it, you can call your credit union rep, tell them what you want, fill out an application and find out how much you can afford. They then give you a total price, you take that price and a guarantee of funds to the dealership of your choice, find a car that fits into the budget and you take the purchase price they give you on the purchase order they give you, fax it to your credit union and grab a check for the dealer in that amount. It’s painless, quick and very easy.

It also works like paying cash when you go into the dealership. You can go into the dealer and do all your business there, present them with a check and be on your way. It’s often faster and more efficient, especially since sales people know that you have a firm price and that if they want to make a sale, they have to stay within that price range. It’s my preferred method of financing.

Lease Your Vehicle

Some people love to lease and other people hate it. I liked it. I did it several times in the past, but then I realized that I like to drive so many different vehicles that leasing is not a good option for me. I can’t stick with one brand forever and make it work, so it’s almost pointless for me to lease here and then want that at a later date. I lose my relationship with the company and the benefits that come with being a second time lessee with them. My first lease was back in 2007. I was newly pregnant with our first daughter and leased a 2008 Lincoln MKX SUV. I loved it; I did. However, I didn’t feel it was what I wanted when I had my second daughter, so we went elsewhere and I leased another vehicle. When that lease was up, I decided I wanted yet another type, and we decided that leasing was too expensive if I wasn’t going to stay put with one company.

It’s a nice consideration, however, since you get to lease a vehicle for a specified number of years. You have to stay within the mileage you choose, you have to keep the car in excellent condition, and you have to return it hoping that there is not too much wear and tear that they might charge you for. It’s a nice option for those who don’t drive much, who keep a pristine vehicle and for those who like to have a new car every year or two or three.

You will do this through the dealership when you go into the lease the car. They will do all the legwork for you, checking your credit to see what you qualify for and making the monthly payments work for you. The more mileage you choose, the more you pay monthly. The longer you want the car, the less you pay. The more you put down, the less you pay. However, you have to give it back eventually, so we never recommend you put that much down on a lease. You also get a price for purchase at the end of your lease should you decide you want to purchase the vehicle.

Pay Cash for Your Vehicle

It’s not a financing option, I know. However, it’s a great option for those who don’t want to spend money on something every month that simply continues to lose value. I know you’re asking why you should put cash into something that’s just going to lose money, and here is why I think that it’s a good idea. I love not having a car payment. I like driving new vehicles and not having to write a check every month to someone else for it. When I bought my BMW, I paid cash for it. It was used, it was a few years old and I was able to pay cash. When it was time to trade it in and it was worth less than I paid for it, I was able to get a huge down payment on my new vehicle because I owed nothing on the Beemer.

What this meant is that yes, I had to put a huge chunk of change into that vehicle. It also means that I was able to do the same for my next vehicle through trade, and I was able to finance very little and pay it off quickly. When this car is done and over with, I will do the same thing. I’ll have another huge down payment on a vehicle, I’ll be able to pay it off quickly and I will always recoup enough of the money I paid out in the first place to be able to make it worth it to me.

Let’s say that you have $10,000 to put down on a car right now. Instead of buying a new car, buy a used car using your cash and finance nothing. It’s already depreciated significantly since it’s used. Now let’s say you drive it for 18 months and decide you want another new car. During this time you’ve managed to put another $7500 away toward the purchase of a new car. Now your trade is worth about $7000. You have $14,500 to spend on a new car. You get a nicer one. Do the same thing for a few years and eventually you will be driving brand new or very slightly used vehicles without any payments. It’s a great option for those who are going to buy a new car without financing.

A Few Other Notes

Not everyone can afford to finance a vehicle right now. The crash of the economy a few years ago was rough for many families, and they are still recovering financially. Let’s say you can afford a new car, but your credit is not on par and you cannot qualify for any good loans. One thing you do not want to do is fall into the trap of purchasing a buy here pay here type of vehicle. These companies do not report your payments to the credit bureaus, so it’s pointless to pay them and not get any credit for your on-time payments.

Additionally, you will likely end up driving an older vehicle with very little value, high mileage and more problems than you’d like to deal with. We simply do not recommend that you go this route. With that in mind, another option for you is to finance through a bad credit lender. While we don’t recommend this on a regular basis since the interest rates are high and you get very little for your buck, you might consider this if it’s your only option. You’re going to get very little and pay a lot for it, but you will see your payments reported to the credit bureau, so you will see that your credit improves provided you make you payments on time, do not miss them and do not have any other negative notations on your credit from now on.

Buying a car is a stressful situation for anyone, and no one really loves the idea. Sure, we all love the idea of driving home in our new car, the security of driving something new and safe and reliable, but the process is no fun and it’s tedious. With these financing options in mind, you should be able to figure out what it is you’d like to do for your new car now so that when it is time to buy, you have more options and less stress.

Photo by Getty Images


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