Did you know that a new car is going to cost you more than $40,000 on average in this day and age? That’s a lot of money to pay for a vehicle!
It might be enough to make you want to consider buying a used car. But even then, you’re going to be forced to pay about $20,000 on average for a used vehicle. It’s more money than most people can afford to part ways with.
To get around having to pay these kinds of prices for cars upfront, you may want to consider looking into taking out a loan for them. There are lots of different kinds of loans that you can take out to buy a new car when you want one.
Before you agree to take on car payments, though, you should educate yourself on the various ways in which you can finance a new car. You’re going to be pleasantly surprised to see that you have a handful of options.
Here are the five best ways to finance a new car in 2021.
1. Borrowing Money From a Family Member
Do you have a family member who is well-off enough to pay for a new car outright without blinking? Then you might want to start your search for new car financing by seeing if they would be interested in extending a loan to you.
Generally speaking, borrowing money from family members is almost always a bad idea for people. One recent survey found that about half of all of the lending transactions among family members end badly.
But you can make sure that you don’t become a part of this statistic as long as you and your family member can get on the same page with regards to your loan. You should sit down and determine:
How much money you’re going to borrow?
What you can commit to repaying on your loan every month?
How soon you will plan to pay off your loan?
What will happen if you fail to pay off your loan in a reasonable amount of time?
You should also offer to sweeten the deal by giving your family member some extra money in the end for their troubles. It’ll give them a good reason to loan you the money that you need to buy a new car.
2. Taking Out a Loan From a Bank
Don’t feel comfortable asking a family member for a loan? Or simply don’t have someone in your family who could float you a loan large enough to buy a new car?
Not a problem! You have other options when you’re trying to finance a car in 2021. You can, for example, run down to your bank and see what types of loans they have available for those buying new vehicles.
If you have some kind of history with your bank, they’re usually going to be a little more willing to work with you on getting a car loan. They’re also going to be open to giving you their best interest rates and lowest monthly installments.
You’re going to want to be careful about rushing into taking out a loan from your bank without considering what other banks might bring to the table. Shopping around for car loans at other banks could prove to be lucrative.
But you should give your bank the first chance to make you an offer when you’re in the market for a car loan. If they put their best foot forward, it could make the entire car-buying process so much simpler for you.
3. Applying for a Loan Through a Credit Union
Do you live within driving distance of a credit union? Or better yet, do you happen to belong to a credit union already?
Either way, you’re going to find that credit unions are often excellent alternatives to banks when it comes to securing car loans. In fact, many of them are going to provide you with better interest rates and more favorable monthly installments in the end.
And as if all that wasn’t enough, credit unions are also usually more focused on keeping their customers happy than banks are. They’re owned by their members, and as a result, they’ll treat you like family once you begin working with them.
If you’re lucky enough to live somewhere in the general vicinity of a credit union, you shouldn’t be shy about considering them as an option when searching for car loans. They could surprise you by giving you access to interest rates you won’t find anywhere else.
They could also surprise you by showing you how easy it is to buy auto insurance through them at a great rate. It’s why it makes all the sense in the world to speak with a credit union about your automotive needs.
4. Asking Online Lenders for a Loan
Would you like to try and secure a car loan right from the privacy of your own home without having to run down to a bank or a credit union? That probably sounds like a pretty good plan, doesn’t it?
Back in the day, people didn’t have this option. They couldn’t possibly find the car loans that they were looking for while they were sitting on their couches.
But these days, it’s never been easier for people to shop for car loans right online. You might actually be making a big mistake by not at least trying to do it since you’re going to be casting a much wider net by shopping for loans on the World Wide Web.
There are plenty of websites that will give you the chance to compare the car loans that different lenders are willing to extend to you. All you have to do is set them up with some basic information, including:
How much money do you need to borrow to buy a new car?
How much money do you make on an annual basis?
And how much time do you want to spend repaying a loan for a new car?
Online lenders will take over from there. They’ll pull a copy of your credit report to see whether or not you’re creditworthy and mull over your loan request to see where they stand on it.
And then, online lenders will begin sending you car loan offers left and right. These offers will come with different interest rates and repayment terms attached. It’ll be your job to wade your way through them so that you can find the best car loans of the bunch.
5. Obtaining a Loan Through a Dealership
A lot of people like to attempt to get all their ducks in a row before heading down to a dealership to buy a new car. They’ll aim to get the financing that they need ahead of time so that they don’t have to worry about doing it later.
But you should know that you don’t have to do this. You can also wait until the last minute and apply for a car loan through a dealership selling a car to you.
The great part about doing this is that you won’t have to do much work on your part. You can forget having to shop around for the best deals on car loans.
But the bad part about taking this approach to taking out a loan to buy a new car is that many dealerships will get you loans through finance companies that will hike up their interest rates and prices. It could lead to you spending a small fortune on a new car.
For this reason, you might want to stick with one of the other options listed here. It’ll prevent a car loan from a dealership from putting you into the poorhouse.
So, What Is the Best Way to Finance a New Car in 2021?
It’s difficult to choose which of the five options that we just listed is best as far as financing a new car is concerned. They each have their own pros and cons.
It’s going to be up to you to do some further digging into each option so that you can pick out the one that will work best for you. It should ultimately be the loan that’s going to help you get your hands on a new car for the lowest price possible.
Go Start Looking for a Loan for a New Car Today
Now that you know all about the different ways in which you can finance a new car in 2021, you should get out there and start looking for the loan that you want. You should be able to secure one within a matter of just a few days in most cases.
Just make sure that you don’t rush through the loan application process at any point. If you do, you could end up agreeing to take on a loan that is going to cost you too much money in the long run.
Are you interested in finding out more about buying a car and getting it for a great price? Read through the other informative car-related articles on our blog.