Buying a Car on Finance

Most Americans buy cars by financing them — paying for the car over time, with monthly payments. There are a lot of loan options out there, including automakers and their lending divisions, banks and credit unions. You can also get zero percent loan deals, which are great for lowering the initial cost of a vehicle. But the interest rates on these loans are usually higher, so they tend to be more expensive in terms of total costs compared to other options.

A car loan is typically the most affordable way to pay for a car, especially when you can find a competitive fixed interest rate. It’s important to shop around and understand the loan details, such as the negotiated price of the car (including any down payment or trade-in), annual percentage rate or APR, and length of the loan. It’s also a good idea to compare offers from different lenders, as well as dealers.

One thing to be careful about when buying a car on finance is over-indulging. Cars depreciate over their ownership period, and you can end up owing more than the car is worth when the loan term ends. This is particularly a risk for people who lease cars, as they don’t build equity in them.

You can avoid these risks by avoiding dealer markups, and focusing on the loan details. It’s also important to make your monthly payments on time to help you build a strong credit history, which can allow you to qualify for better car loan terms in the future. cars on finance

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