Whether you are thinking of buying a vehicle for the first time or whether you are looking to replace your existing car, there are a number of things that you will need to think about before you make your purchase. One of these is how you intend to pay for the car – something that you will need to think about whether you are buying a new or a used vehicle.

There are a number of different funding options that you can look at in order to pay for your car. You may not be eligible or able to consider all of them, as your personal and financial circumstances will determine your eligibility.

Popular funding option when you buy a car

It is important to think about not only how much you can afford for a new car but also where you will get the necessary funds to make your purchase. Remember, if you are planning to purchase a brand new vehicle such as the Honda Civic 2018, you will need to have a fair amount of money available unless you plan to get it on dealership finance. Amongst the options available in terms of funding for a new or used car are:

• Using your savings: If you want to be able to pay for your car outright and avoid getting into debt, then using savings is a good idea. You may be thinking about leaving your savings where they are and taking out finance to buy a car. However, do bear in mind that unless you can get interest free finance, you will end up paying far more in interest on borrowing the money than you will earn in interest on your savings.

• Dealership finance: You can generally get dealership finance on both used and brand new cars that you are buying through that dealership. However, bear in mind that your credit history and rating will determine whether or not you are successful in getting finance and could also affect the rate of interest you pay on the finance.

• Personal loan: Another option you could consider is a personal loan from your bank. You can often get some competitive deals on personal loans these days from mainstream lenders. However, again the ability to take out a loan will depend on your financial circumstances and your credit status.

• Secured finance: If you own your own home and your credit isn’t quite good enough to get a personal loan or dealership finance, you may want to consider a secured loan. These loans are secured against the equity in your home. This means that if you fail to keep up with repayments, your home could be at risk. However, as long as you ensure repayments are made properly, this could be an effective option for homeowners.

• Credit card: If you have a credit card with a pretty generous limit, you could look at using online online finance specilaists such as https://www.sofi.com/credit-card/ to pay for your new or used car. However, do bear in mind that the interest rate charged on the average credit card is very high. So, if you are thinking of doing this, make sure you have a card that offers interest free credit on purchases for a generous period of time – and then make sure you are able to clear the balance within that interest free period.

These are all possible funding methods for the purchase of your new or used vehicle, and all have both pros and cons that you will need to think about.