3 – Budget and Financial
Ownership options. New. Leased. Pre-owned. Certified. Reputable dealership. Small dealer. Actual driver/owner.
Depending upon your needs, wants, and urgency, you next must decide on your payment particulars. Do you want to pay cash outright and receive the title? Or are you in a situation where you need to make payments?
Below is a table of pros and cons for each financing option type.
| Option | Pro’s | Cons |
| Cash purchase
Save up your money, pay cash, receive the title, and own the car. |
You are the owner and no one else is. You don’t have any payments to make! | If you don’t have the cash or you need it to live on, you’ll have to figure out a different financing option. |
| Car loan
A loan made through a qualified lender such as a bank, credit union, car dealership, or credible online lender. Traditionally done only for new vehicles, but now also for up to 2 years old. |
Allows you to purchase a needed [newer] vehicle if you don’t have the cash to do so. | Can be a higher interest rate if you have little/no/poor credit. |
| Lease
The lease company holds the title. You can write off the expenses for business-held leases. |
You get to drive a newer vehicle. Good option for someone who likes to trade-in/upgrade frequently. | Higher cost of usage as opposed to owning. |
| Seller-financed
The individual seller (not a dealership) holds the title while you drive the car and make payments. Some sellers make it part of their marketing plan to target buyers in extreme need, hoping they can’t make payments and then repossessing the car, keeping the down payment and doing it again to someone else. |
We recommend against this option unless there is just no other way – try to avoid it!
Much better is to go to your bank and get a car loan so you can pay off the seller and be done with them. |
Without a written contract, an informal agreement is difficult to enforce. There is the danger of the seller changing terms or that the buyer and seller run into problems with they later realize they have different understandings. If you have to go with seller-financing, try to involve a lawyer or bank in writing up the paperwork and holding the title of the vehicle until you pay it off. |
| Trade-in
Buyer exchanges their current vehicle and title for credit/discount on the vehicle they are purchasing. |
Lets you quickly get rid of a car you don’t need, and provides additional funds for making your purchase. Usually a good option if you have a very low value vehicle which would not sell for much. | Brings less value than if you were to sell it yourself. Dealerships make their money by selling cars and not by buying yours from you. If you have a higher value car and are not in a hurry for the money, you might want to advertise it for sale yourself. |
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