The Best Ways to Finance a Car

When you're going to look for a new or used vehicle, you have a lot of different options to finance a car. Vehicle financing is a huge industry, with nuances that car buyers should know about. Here are some of the choices available to potential car buyers for getting an auto loan.

• Direct dealer loans. Many drivers simply take out financing at the dealership for the sake of convenience. Watch out for dealer markups on financing rates
• See what kind of interest rates you can get >>
• Third party loans. Some drivers don't know that they are not bound to the financing provided by a dealer. Potential car buyers can shop various third party lenders for their auto loan money
• Bank and credit union loans. Many banks offer auto loans to customers on their own terms. A credit union can also be a good source for an auto loan
• Captive financing company auto loan. Car buyers can also try the "captive financing companies" of big auto makers. These loan providers are set up specifically as an agent of a manufacturer to help get customers into the vehicles offered by that auto maker
• Balloon payment car loan. A balloon payment car loan is useful for those who expect a big financial windfall in the near future. It lowers monthly payments in exchange for one big payment at the end of the loan term
• Secured car loan. A secured car loan is backed by collateral, such as a property or another owned vehicle. The lender often offers lower interest rates, in return for the security of knowing that there is collateral attached to the loan
• Auto pawn loan. An auto pawn loan is when the collateral for a loan is a vehicle that the borrower is currently driving. Financial experts warn borrowers against getting involved in auto pawn loans that can spiral out of control with multiple loan segments that rack up interest and debt
• Long term car loan. Some lenders offer loans up to seven years and beyond, where a buyer can pay off a vehicle with a lot of low monthly payments. However, with these loan types, there is the danger of being "upside down" on a loan, or owing more than the vehicle is worth
• Get A Free Auto Loan Quote >>

Always be aware that unless you have collateral backing a loan, your best key to good interest rates and equitable deals is a good credit situation. Know your credit score and how it got that way, and be willing to work on your credit to provide for better future options.