It is time for another car. But current conditions have made it hard to qualify for a loan. You do not have the cash. You may not have enough money for the down payment. Trading in your old car may not be an option. You will need some kind of car finance strategy. Here are two choices to consider.

No collateral loans

You will not have to worry about down payment with this type of loan. Signature loans only require your signature. There is no collateral needed. You will have the cash that you need for your car.

You could pay cash for your next used car. That could mean a lower price. Many used car dealers are willing to bargain for the price of a car. If you pay cash, they take no risk. Moreover, they get their money right away. There is less paperwork. They do not have to be concerned with financing.

It is possible to use signature loan money for a new car down payment. However, many banks and loan companies may not like this. They want down payment money from places like savings. It can also come from a used car trade-in. If you have nothing invested in the deal, you may be more likely to default.

You may not be able to get a signature loan. Because of no collateral, they are harder to get. You will pay more interest in most cases.

Credit union loan

You might have a credit union through your employer. They might be the best chance for a signature loan. Your payment money will come out of your paycheck. That will make you less of a risk. Credit unions are a more personal institution in general. They are more likely to work with you to finance your car.

Using plastic for your loan

Credit card cash advances are another option for signature loans. They carry a very high interest rate in most cases.

Home refinance

There are times that you might not qualify for a conventional car loan. You might consider refinancing your house. With a refinance, you take out a new loan on your house. They will deduct your equity plus loan fees from the amount. You will continue to have one house payment each month. When you get the money, you are free to use it as you choose.

You may be able to secure a second mortgage on your house. This could give you the money for your next car. It can also give you an all cash purchase advantage in buying a new car. You pay higher interest on these types of mortgages. In addition, it will give you have two house payments instead of one.

This money can be used for any purchases. Your car will be yours with no liens on it.

However, you might not qualify for a second mortgage or refinance. In addition, you will increase your debt and monthly payments considerably.

In closing

There are ways to buy a car when it seems impossible. There are many car finance options available. You can borrow on your signature and your house. Be careful as creative financing can have pitfalls.

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