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Buy or Lease a Car?
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Getting Financing

Most people can't afford to pay for a new car with cash, so they end up making a down payment and financing the rest.

Basically, that means that you're getting a loan through a bank, credit union or the car dealership. The lender determines what interest rate you will pay based, in large part, on your credit score (the better your credit, the lower interest rate you can get). The length of the loan (e.g. 48 months, 72 months, etc.) largely depends upon the monthly payment you can afford. The lender holds the car title until you pay off the loan.

Although you can conveniently get financing through the car dealership, the price you pay for that convenience is typically a higher interest rate. To get the most favorable loan terms, your best bet is to arrange financing through your bank or credit union before going to the dealership.

And beware… the dealer may offer you "spot delivery", which is the option to take possession of the vehicle as soon as you've committed to buying or leasing it, before the financing has been finalized. This can end up costing you in the event that your financing is denied. Therefore, it is recommended that you wait to take possession of the car until your financing has been approved. Read more about the potential pitfalls of spot delivery.


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