Financing Options When Buying Your First Car

If you have just passed your test and are on the lookout to purchase your first car through either privately or via a car dealer, you should check around so that you know beforehand what financing options are there available to you. Car dealers often offer financing options but their rates are usually quite high, it pays to check out all finance options that are available to you before signing on the dotted line.

* One financing option is to pay cash for your first motor. Paying cash can put you in a very good negotiating position.

Not many people can afford to pay cash upfront when they want to purchase a car, especially if it is their first but if you save the money over time, you will probably manage to save enough. To make it easier try to think about this saving as if you are paying a monthly rate for a loan on a car you already have, the good thing is that this is loan wont cost anything in interest. It requires a lot of discipline to save but it is not impossible, many people have done it before, so why cant you?

* Another financing option available to buy your first car is to take a loan through a bank or credit union. If you have you saving and checking account with your local bank and have keep it in good order, you will probably be able to get a car loan that has good interest rates attached to it. If you have joined in a credit union, even better because credit unions are not created for profit their interest rates are usually very reasonable.

Make sure that prior to applying for a loan, you do your homework. Check your credit rating and shop around to find the best interest rates. Do not rush into the first financial institution you find and sign the loan agreement without knowing all the other alternatives that are available to you.

* The last financing option you should consider is to purchase a new or a used car through the dealers finance company. This is usually the only option available if you have a bad credit record, because the loan is usually secured against the vehicle itself. If you don’t make your monthly payments the finance company can simply repo the car.

As we said above the costs on this type of vehicle financing may be very high. This requires again you doing your homework to find out what your credit history is like and all the available financing options have prior to choosing the most expensive one.

There you have it, all you need to decide is how much you can afford and whether you want your first car to be brand new or used make sure you take into account insurance costs, insurance is usually very high for first time drivers. If you have just passed your test you will probably be better off with an older car that doesn’t cost too much and has a small engine.

When I first past my test I bought a car similar to the one that my driving school used, this made me feel more comfortable when I first went out on the road by myself.