There are many reasons to shop for a new car – whether your family is expanding and you need something more practical, or the cost of auto repairs has begun to outweigh the value of your car. Maybe your car has finally broken down beyond worthwhile repairs, or an unexpected event has led to your car being totaled. Whatever the reason you’re shopping for a new car, one of the first things you need to figure out is how you’re going to pay for it!

Most people don’t have several thousand dollars set aside for the purchase of a new vehicle, especially if purchasing a new car is unexpected and you weren’t necessarily planning to be shopping for a new vehicle. If that’s the case, you’re probably going to need a car loan.

Dealer financing can be appealing, since it seems convenient, but there’s some things you have to watch out for with dealer financing. First, many dealers have both new and used vehicles on the lot, varying wildly price range. Dealer financing, then, is typically only available for new or used vehicles with a minimum price – the older, cheaper cars may not qualify for dealer financing. If you are looking for an affordable vehicle, producing several thousand dollars can be outlandish, even if the dealer refers to them as "cash cars." This is why you would need to get a car loan through a third party financing company.

Other, smaller dealerships may not offer car loans, which would be another reason to apply for a loan through a financing company. Even if the dealership you choose does offer financing, as mentioned, their credit requirements may be too stringent, making it difficult to obtaining financing through the dealership. Plus, any time you are attempting to finance a purchase, it’s very important to be aware of the interest rates, as well. Even if you qualify for dealer financing, is it truly the best deal?

The best thing to do is research car loans, including interest rates and credit scores, and the minimum amount to finance. This way, you can easily stay within your budget. Apply for the loan via the finance company, and once you’re preapproved, you can print the finance documents and take that to the dealer. Ultimately, financing your car via a third part car loan gives you far more flexibility in the purchase of a vehicle than limiting yourself to dealer financing or cash purchasing, so that you get the best vehicle that meets your needs.