| Get the Best Auto Loan - Drive Down Your Cost of Financing a Car |
So you don’t have the cash, but that clunker of yours has gotta go. Congratulations -- you’re joining the 80% of the nation’s car buyers who have to borrow money. So now comes the really tricky question: From the myriad financing options available, which one should you choose? Should you take out a personal loan, use one of the auto manufacturer’s special financing deals or take out a home equity loan? And these are only a few options. This is not a cop-out, but the answer is: It depends. Consider the pros and cons of the most commonly used financing methods. If you read all of the personal-finance books out, most of them will tell you that you should secure your financing before you enter the car showroom. The reason for this is that if your dealer is brokering a loan from a bank or another financial institution, they may be taking their cut.
Home Equity Loans
have become a popular way to purchase cars. About 13% of all home equity loans are used at least in part for this purpose. The reasons are twofold: First, many people have sufficient equity in their homes to come up with the sums of money necessary to purchase a new car; and second, home equity interest is tax-deductible, while interest on a typical consumer loan is not. You can get either straight home equity loans that let you borrow a certain amount, or a home equity line of credit (HELOC). A HELOC offers you the option to borrow up to a certain amount against your home’s equity at any time. It’s like a revolving line of credit, in which you’re offering your home as collateral. Don’t ever forget: You’re using your home as collateral. For someone in the 36% federal, state and local tax bracket, an 8.5% home equity loan paid off over five years would save you about $1,921 over a comparable car loan from your bank. But make sure you actually pay off your home equity loan as quickly as you would your car loan or you may lose your home equity loan interest payment advantage.
In the end, how you pay for your new car depends on how you use the car and how long you’re willing to keep driving it before you turn it in for another one. In terms of the best deals on regular consumer loans, your best option is probably a home equity loan, as long as you don’t overextend yourself.
After that the online services, like eLoan, nation's largest online vehicle lender, offer the best auto rates. Check out the great source to get an auto loan to buy vehicle, and apply online for a low rate auto loan.
Find all the basics and tools you need to close an auto loan.
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