Buying a car is stressful.

For many buyers, picking up a new set of wheels is a huge financial decision that will affect their budget for years to come with the average new car loan now over $30,000. Yet, most car dealers try to force buyers to make this major decision in a very short amount of time.

This is why it’s so important for you to fully understand what you’re getting into before you ever get to the dealer.

If you’re thinking about buying a new car, keep reading for a closer look at financing options and the best way to pay for a car.

Understand Your Credit

When you want to finance a car, it’s really important to understand your credit before you start shopping.

If your credit is great and you have some money for a down payment, you may be able to get a great financing deal right at the dealer. Many dealers act as auto financing brokers and work directly with a few banks to find financing for buyers.

If your credit isn’t quite as good, try shopping around for financing and see what you can afford before heading to the dealer.

Know Your Stuff (Before You Get to the Dealer)

Before you get to any car dealership, it’s really important for you to know your stuff. Get a good understanding of what type of car you’re looking for and what you can afford.

Car salespeople often use language and terminology that’s confusing, so make sure you keep the financial talk simple and stick to discussing the overall price — not just payments.

The Best Way to Pay For a Car

While there are many ways to pay for a car, most buyers either finance a vehicle or pay cash.

Let’s take a closer look at some of the most common options.

Traditional Financing

Most vehicle purchases are financed through a traditional bank loan. If you’re going to finance, this is the safest option and will get you the best terms.

Most car loans are three to five years in length with interest rates based on current market trends.

Buy Here Pay Here

Some car dealers offer in house financing, sometimes known as “buy here, pay here” dealers.

These types of dealers usually work with buyers who have poor credit. Much like lenders that offer payday loans online, it’s easy to get a loan and buy a vehicle at these types of dealers, just make sure you understand the terms.


If you can afford it, cash is one of the best ways to buy a car. You might have to buy an older car, but you’ll have no payments and very little hassle when buying.

Your Turn

Buying a car doesn’t have to be complicated now that you know the best way to pay for a car. 

Just make sure you understand your credit and explore all of your options before jumping into a negotiation with a car salesperson.

Check out all of our articles for more on personal finances and managing your life.

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