 TITLE: What Is the Best Way to Pay for a Car? CONTENT: Find a Low-Interest Auto Loan\n-----------------------------\nConsumers often turn to auto loans to finance car purchases when they can't pay for it with cash. These are secured installment loans, meaning you repay in fixed monthly installments, and if you can't keep up, you risk the car being repossessed.\nWhen financing a car, do everything you can to get the lowest possible interest rate on your loan. Due to the size of an auto loan, interest can add significantly to the total cost of the vehicle. For example, a $12,000 auto loan with a 7% interest rate and a 60-month term will end up costing you $14,257 by the time you've paid it off. That's $2,257 that could have otherwise gone toward a down payment on a home or other financial goals. Getting that interest rate down to 4% could save you roughly $1,000 on your loan.\nYou have several lender options when financing a car:\n*   **A bank or credit union**: Check the borrowing options your bank or credit union can offer you before you start shopping for a vehicle. They may be able to preapprove you for a loan with a lower interest rate than you'd get elsewhere. Once you have the loan documents in hand, you can bring them with you to a dealer to show you're qualified to buy a car up to a certain price. Be aware that financial institutions often charge different interest rates depending on whether the car is new or used, in addition to the age and mileage on the car. However, going through a lender typically means lower loan interest rates than going through a dealer.\n*   **An online lender**: If you'd rather not go through your own bank or credit union, or if you're not able to get approved, many online-only lenders now offer auto purchase loans. These lenders typically offer quick approval and may be more lenient on approval and rates if your credit isn't in tip-top shape.\n*   **The car dealer**: If you don't get preapproved by a lender before you go car-shopping, you can apply for financing at the car dealership once you've selected a vehicle. It may be easier to get approved through the dealership financing office than with a traditional lender. They'll typically shop your application with several lenders they partner with and provide you with a few options to compare. The vehicle manufacturer also may offer financing themselves, which is called captive financing.The rates you'll get from a dealership may be higher than what you'd get from a bank since the dealership may bump up your rate slightly in order to collect a cut. Some dealerships offer 0% APR promotions or other offers on new cars, so it could be worth going through a dealer if the savings are worth it. Some dealers even offer financing directly (buy here, pay here), but it's usually geared toward those with bad credit and comes with steep fees. END