Financing a Vehicle: The Many Ways to Buy a Car

2007-03-08 10:33:40

( Automobiles )



There are many ways of financing a vehicle purchase, depending on the type of vehicle you want to purchase and how much cash you are willing to make as down payment.

FULL AND PARTIAL

Financing a vehicle may either be a partial or full financing. Under a partial auto financing, you are required to put up a certain amount of cash to be used as down payment, depending on how much money you can spare, you may pay half in cash and finance the remaining half. In a partial auto financing, the dealer will specify the minimum down payment that can be made, but you are not limited to this, you can pay more than the minimum amount if you can afford to.

If you are going for full financing a vehicle arrangement, this simply means that there is no required cash outlay on your part. You will pay in installment the entire value of the car, plus interest and other proprietary charges.

IN-HOUSE OR THIRD-PARTY

These two types of auto financing can either be in-house or third-party. In-house car financing simply means that the car dealer company itself will finance your car purchase. You will buy the car from the dealer on an installment basis.

The other method of financing a vehicle is getting a bank or other third-party creditor to finance your car purchase. Under this plan, your lender will pay the car dealer in cash the entire value of the car, and you in turn will pay the lender. This is arrangement is like having someone buy an item and then you buying it from them on a staggered or installment basis.

The difference between the two types, the in-house financing is easier to get approved for because they require less stringent requirements. However in an in-house financing, the interest charges are generally higher, compared with a creditor or bank financing.


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