Financing: Where will you turn? when Buy or Lease?

Once you've found a monthly car payment amount that you're comfortable with, set your sights on financing. If you don't have the cash on-hand to buy outright, consider these options:

Once you've found a monthly car payment amount that you're comfortable with, set your sights on financing. If you don't have the cash on-hand to buy outright, consider these options:
Table of Content

* 1. A New Set of Wheels
* 2. Financing: Where will you turn?
* 3. Used or New?
* 4. Buy or Lease?
* 5. Choosing the Car

1. Home equity. Since homes and cars are usually the largest single purchase most people make, it's not surprising that some smart consumers use one to acquire the other by taking out a second mortgage to buy a car. Because the interest on a home loan is generally tax-deductible, many use either a fixed-rate home equity loan, or a home equity line of credit (HELOC) to finance their wheels. A bank or a credit union can provide you with the loan, assuming you have enough equity in your home.

2. Bank loan. Another popular choice is a standard car loan. Credit unions tend to have the best rates, but banks can be equally competitive. Don't limit yourself to local lenders, however. Drive down the information superhighway; the Internet is a great vehicle for finding good deals.

3. Car dealer financing. Opt for this choice only if you have problems getting a home equity or bank loan. Financing through a dealership will generally involve higher rates and more fees.

Borrow from reputable lending institutions at competitive rates. If you don't qualify because of a tainted credit past, consider rewriting history and wait on that new car until you've got your finances back in shape.

Next to a home mortgage, a car is one the biggest purchases you can make. Take your time and shop various lenders before you make a decision. Understand the fees and the interest rate you'll be paying. Haste will make waste of your bank account if you're not careful. Be comfortable with your financing before you sign on the dotted line.

Deciding whether to lease or buy comes down to crunching numbers. Generally, a lease requires little or no money upfront, and requires lower monthly payments. The downside is that when it expires, you're stranded on the side of the road without a car.

Deciding whether to lease or buy comes down to crunching numbers. Generally, a lease requires little or no money upfront, and requires lower monthly payments. The downside is that when it expires, you're stranded on the side of the road without a car.
Table of Content

* 1. A New Set of Wheels
* 2. Financing: Where will you turn?
* 3. Used or New?
* 4. Buy or Lease?
* 5. Choosing the Car

If you buy, you may pay a little more per month; but when your loan is finished, you're left with a familiar set of wheels-one that you can resell when you're ready.

This decision also involves convenience. With a lease, you get the pleasure of driving a new car every few years, one that will not require heavy maintenance costs on your part. The monthly payment for a car will also be lower if you lease a vehicle rather than purchase it.

However, owning allows for more flexibility. You're not constrained by the mileage limits of a lease, and you can sell it whenever you'd like.

At this point, you've mulled over some pretty important questions, crunched some numbers, and come up with concrete answers. Like the question "new vs. used," "lease vs. buy" is a personal decision. To find your answer, carefully evaluate your short and long-term needs, and factor in your personality. Above all else, your decision should feel as comfortable as Corinthian leather. Take your time and you'll make the right call.