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However, as with any major purchase, there are good and bad ways to go about it.
Personal finance experts Rachel Cruze and George Kamel are no strangers to making big purchases and decisions.
In the episode, the topic of financing a vehicle came up.
Here are some of the optionsto consider when buying a car.
Kamel feels terrible for anyone who leases a car.
You dont gain any long-term value when you continue to lease cars one after the other.
You may also need to pay extra fees fordamages or excess mileagewhen you turn the vehicle in.
Auto loans are similar to any other pop in of loan.
Youll often start with a down payment, which cuts down on how much youll need to borrow.
Then, youll make monthly payments with an agreed-upon percentage of interest until the loans principal is paid back.
Taking out a car loan means the car will eventually become an asset you wholly own.
However, the interest that accrues over time will add thousands of dollars to the vehicles original price.
Negotiating alonger loan termwill reduce your monthly payments but you will pay more overall.
Paying Cash
According to Kamel, paying cash is the best way to buy a new car.
While he agrees this is the most painful, unattractive answer, its also the most financially responsible.
Paying for a vehicle in cash means gaining an asset while maintaining your financial freedom.
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