If you would like to get a new car but you do not have the money, then you should not worry because you can get car financing. It would not be surprising if you did not know what it is or even if you have never heard of it. However, you are going to be provided with all the information which you need in order to be able to get the best possible car financing!
Did you notice that I mentioned “the best possible car financing”? Why did I say that? How many kinds of car financing are there? Those are all very important questions whose answers are of great significance as well.
Basically, there are three main sources of car financing: car dealers, banks, auto finance companies. As the three of them are available, you can easily understand that each of them has advantages and disadvantages. Therefore, one kind of car financing could a better alternative in one case but a worse option in another case.
However, in this article we are going to talk about the best car financing in most of the cases. It is important for you to know that is the car financing by dealers. Now, you are going to be given the reasons why it is that way.
Firstly, dealers can give you car financing with the lowest possible rate of interest. It is usually between 5 and 7 per cent, which is two time less when compared to the banks’ average rate of interest and 40 per cent less when compared to the auto finance companies’ average rate of interest. If you have not studied finance or you are not very good at math, then you are going to be given a simple example which will help you understand the great amount of money which you could save.
Let’s take that you get car financing of $20.000 from a dealer. Then the interest which you will have to pay is (20.000x6%) which is $1200. But how much would it be if you got car financing from a bank. Here is the answer: 20.000*13% makes $2600. Don’t you think there is a huge difference?!
But there is something else- dealers show much more flexibility when giving you car financing. You can choose your monthly installments and the period of refunding. At the same time, banks determine how much you need to pay every month and how many years it will take until you refund the finance. I am sure that it does not appeal to you, does it?