Auto Loan Options
When you finance a new vehicle, you have several options from which to choose. Here is a list of potential financing sources and their pros and cons.
Dealer Financing
Most consumers choose to finance through the dealership because they can buy and finance the car in one fell swoop for maximum convenience. What most consumers don't realize, though, is that financing deals are quickly becoming a bigger cash cow for dealerships than the actual sale of the vehicle. Dealerships usually mark up the interest rate of the lending institution to pocket some of the profit from the financing deal. Consequently, you are far better off choosing an equally convenient option, like an easy online auto loan, that cuts out the middle man. With an easy online auto loan, you can deal directly with a lending institution, which means no costly dealer mark-ups.
Pre-Qualified Easy Online Auto Loan
Pre-qualifying for an easy online auto loan is usually the best way to get a low interest rate. Pre-qualifying means you will apply for an easy online auto loan and lock in a low, fixed interest rate before you even go car shopping. This protects you against future rate increases and gives you the upper hand in negotiations with the dealership. Having a pre-qualified easy online auto loan also leaves you free to focus on finding the right car at a good price rather than having to worry about also financing the car.
Home Equity Loan
If you are a homeowner, you might want to consider a home equity loan as a potential source of vehicle financing. Home equity loans have the advantage of very competitive rates and tax-deductible interest. However, home equity loans have a fair amount of drawbacks as well. For one, home equity loans are not as convenient and quick as an easy online auto loan, as the paperwork can be horrendous. Additionally, if you get behind on payments, you could lose your home, which is a huge risk to take just for a new car.
0% Financing
Dealerships use 0% financing gimmicks as a ploy to lure customers in. What you don't see advertised is that only a small percentage of borrowers have the credit necessary to qualify for these offers. For the few who do qualify, the dealership will compensate for the lost revenue in interest expense by either increasing the price of your vehicle or forcing you into a shorter-term loan with high payments. Either way, you are better off with a low-rate easy online auto loan. Learn how to choose an auto loan on the next page.
