For many people, the kind of car they have is part of their identity as much as it is a tool for transportation. When you are younger, you may have to settle for the kinds of cars you can afford. But as you get older and more established, you may be in a position to purchase the car of your dreams. When you reach that point, a big question will be how you can finance it. Here are some of the best ways to finance the car of your dreams.
If the car of your dreams is a new car, then it may make sense to go with the preferred lender that the dealer or car manufacturer uses. New car dealerships often offer low financing as a promotion to increase sales. If you finance through the dealer and use the lender that is part of the promotion, then you might get an interest rate that is much below the market rate and could be as low as 0%, depending on the offer and your credit score.
Bank or credit union
If you are buying a used car or if you just feel more comfortable finding financing on your own, then a bank or credit union could be the right choice. Most banks and credit unions offer competitive financing rates for both new and used cars. If the financial institution is one you already have an account with, you might even get a deal, such as a small discount on the rate if you set up electronic loan payments. Bank loans also might help you avoid extra markup on the vehicle.
If you don’t want to work with a bank or other commercial lender, or if your credit isn’t high enough to get the best rates, there are other ways to finance the car of your dreams. If you have a whole life insurance policy that has a considerable cash value, you could take out a policy loan to pay for the car. You also might be able to borrow money from a 401(k) plan if your employer allows loans. If your credit is good, you have the money to pay off the loan quickly and the dealer will allow it, you also could pay with a credit card.
There is no way you should not buy your dream car because you can’t get financing. There are numerous ways to get a loan to buy the car of your dreams, no matter what your situation is.