How can I finance my new car?

Purchasing a vehicle may be a necessity depending on the region we live in, but current prices aren't helping. New cars have increased their price by between 70 and 100% between 2015 and the present. Taking advantage of this trend, used cars are also increasing in price by an average of 10% annually, according to AutoScout 24. Considering these prices, what options do we have for financing our vehicle at the dealership?

The first option, and if we have the savings, is to make the payment in cash. In these cases, the dealership usually offers us a discount on the lower initial price for financing. In that case, I would always compare the return I could get if I invested and what a loan would cost me, to decide whether to pay it off or finance it (even if I have the money).

The second option is to take out a traditional loan with our own bank (and pay it in cash) or with the dealership. In this case, it will be important to compare interest rates and discounts. Financing directly with the dealership will result in a larger discount on the price (they'll earn on the interest later) but usually has a higher interest rate. To avoid surprises, you need to multiply the monthly payment for the loan options by the number of months to know exactly how much you're paying for the new car, including interest (the price can skyrocket).

Finally, dealerships offer the option of making reduced monthly payments with a larger final payment. In this case, the discount off the initial price is even greater and usually includes maintenance for the first few years. At the end of the term, you can choose whether to return the car, trade it in for a new one, or pay the final payment. You can even refinance the final payment with a traditional loan.