LOW RATE CAR LOANS

Willing to purchase a car, go ahead, but be aware of financial options. There are many banks, financial institutions and other credit unions who offer favorable interest rates on car loans. It is also prudent to consider options like 401 (k) loans for a guaranteed-to-be-approved-loan with competitive interest rate, or home equity line of credit for potential tax deductions with low interest rate. Opting for any of the above mentioned option would be sensible if it helps you to get low rate car loans.

Getting loan for car is not a cumbersome task; the dealer can often manage a loan for you. But, low rate car loans should be your preference, and this is only possible when you shop for financing companies before choosing the car. This is helpful to evaluate the terms and conditions offered by the dealer and compare it with terms applied elsewhere. Some manufacturers offer special financing deal on there car, if this option is available it is probably the best option to choose. Be aware, of disguised conditions applied, that is, may the low interest rate require some special requirements such as, large down payment or else.

One more good option of purchasing a car is by taking home equity loan. The benefit of such financing is that the home is considered as a security and the interest is mostly tax deductible. But, disadvantage associated with it is that if the borrower defaults in repayment of loan as agreed, he may lose his home. If a person has sufficient dollars accumulated in one’s employer-sponsored retirement plan he could opt for 401(k) or 403(b) loan to purchase a car. Generally, the plan sanctions $500 to $50,000 or 50 per cent to 80 per cent of the plan value from your account. The interest rate is more or so same as the home equity loan, but the greatest advantage is that you repay interest to yourself. Some disadvantage is that if you have outstanding loan and the stock market soars up tremendously you are bound to lose the benefit on that portion which you have borrowed. Other to it, non-repayment of loan within five years could be treated as income, thus subject to early withdrawal penalty.

If low interest rate is your concern, you can use loan from a family member and buy a car. However, before asking for low or no-interest loan from a family member, one should have knowledge of potential tax implications related to such type of loan. Here, point to be remembered is that loans up to $10,000 generally do not invite imputed interest or gift tax. But higher to it may attract gift tax for the lender. The key to determine the best course of action for loan lies in your financial position and circumstances.