In this article we will explore these options and hopefully make the financial decision easier.



Option 1 ? Financing through a dealer

Car dealers are in the business of helping you purchase a car, from finding your "dream" car to providing financing. Dealers will help you with the financing by asking you to fill out a credit application. Depending on your credit history and down payment amount, the dealership will negotiate a loan for you with their finance company for the amount of years (3 to 5 years) or payment range that you have requested.

The benefit to obtaining financing through a dealership is the convenience of walking into the dealership, finding a car, purchasing it and driving it home the same day even if the financial institutions are closed! This benefit however allows the dealership to charge a higher interest rate. The interest rate percentage depends upon your credit score.

During the duration of your loan, the lender will hold onto the title for the car. Once the loan is paid in full the title will be transferred to you. You will then have full ownership of your car.

Option 2 ? Lease option

Leasing can be a great way to get a new car. A few things to think about when considering leasing a car:

1. How long do you want to keep your new car?

2. How many miles per year do you drive your car?

3. How much of a down payment do you want to make?

Once you have considered those questions, the dealer will have you fill out a credit application. The dealer will look for the best lease option based on your credit score, the length of your lease and how much you want to pay up front. Most experts recommend 3-year leases and the least amount required for a down payment. Most lease contracts have yearly mileage restrictions of about 12,000 miles per year. If your mileage calculation is higher, negotiate a contract with a higher mileage allowance. This will probably increase your monthly payment, but in the long run will prevent overage charges at the end of your lease.

The benefits to leasing are:

1. Lower monthly payments

2. Little or no down payment

3. Low maintenance costs (New cars are covered under a manufactures warrantee the first 3 years)

At the end of the lease you have the choice of purchasing the car for the value specified in your contract (called residual value) or lease another new car. Don't forget that you can always try negotiating a lower buying price.

My mother has leased cars, but this last car she leased she decided to purchase at the end of her lease period. She negotiated a very good price for the car with the dealership, below the stated value in the contract. So don't be afraid to negotiate on a leased car. They say in this world everything is negotiable!

If you opt to return the car, you may receive your security deposit back if the car is in excellent condition. If the car has excessive wear and tear the dealer has the option of charging you a fee.

These are all factors you must consider when leasing a car.

Option 3 ? Purchase car for cash

The third option is to purchase your new car outright after negotiating your best deal! This is the easiest and quickest way to close a sale.

I know that in this day and age everyone is scrimping to save enough to buy the necessities of life. So many people do not have the money to buy a car outright.