Car Financing, Leasing or Paying Cash

In both Canada and the U.S. some form of car financing accounts for more than 87 percent of cars purchased. Only a small sampling of consumers can actually afford to pay cash outright. Car Financing is a general term meaning how you pay for the vehicle. Basically, it can be borrowing the money with a car loan or leasing a car from the manufacturers financial sector, the banks or even a credit union. These companies are the true owners of the vehicles.

The financial component of the vehicle purchasing process is often overlooked before the car is bought. The main and sometimes only question asked is should I lease or buy? The answer isn't always an easy one and you should be researching your response with more vigor many times than you did with deciding on the vehicle itself. That is why one thing we recommend is that you do your homework to not only answer this question but gather as much financial information as you can before even visiting a dealership.

Often when you're shopping for either a new or used vehicle, the lending company that has the best APR (annual percentage rate) is the manufacturer and that is available only through the dealer. Discounted rates such as zero percent and other attractive offers come from the "captive" finance companies such as Honda Financial Services.

These companies secure loans through their own credit lines and then allow the consumer to borrow at a discounted rate. These "teaser" rates are often only available to clients with extremely strong credit or on very short terms, making the payments unaffordable. Keep in mind, many times the dealers don't have the best deals and only secure bank financing which you may be able to achieve yourself, and sometimes at a lower rate. Once you have negotiated the purchase price, you may have all those significant savings revoked through the car financing aka. F&I (finance and insurance) office. Shopping for rates and researching all of the intricacies involved with car financing will ensure you get the best deal and only purchase the products and services you truly want or need.

There are a few steps to complete even before setting foot on a car lot

  • Research and obtain your *true* credit score
  • Shop for the best APR available outside the dealership
  • Research the products and services available through the F&I office that may interest you
  • Be sure to click all the links for this site to educate yourself as much as possible
  • We have broken down into sections all of the components of the car buying process and have compiled more free in depth information for each. If you are sure to check out all of the sections you can be assured you will not only have more information than nearly all of the car buying public but that you will make this experience as enjoyable as possible.

    We have uncovered all of the information including the best ways to negotiate a car purchase price, whether you should buy, lease or pay cash, the ins and outs of car financing through the F&I office including the tricks and grey areas, how to read a car advertisment and how to save yourself time, money and headaches.