Unless you're paying cash for your new vehicle, the only way to take one home is to finance or lease it. Financing requires making monthly payments to pay for the purchase of the vehicle. Leasing involves paying for the use of the vehicle over time plus any lease charges. More information is available at the Lease vs Buy section of our website.
Much like every decision you make, there are pros and cons to consider before you actually apply for an extension of credit.
The Benefits of Good Credit
A good credit history can open many doors. Many big-ticket items (like cars) are purchased on credit. Using an extension of credit to purchase or lease a car, purchase a new home, or purchase anything else can be convenient, and in many cases to your advantage. An extension of credit is also commonly used to purchase everyday items such as groceries and that new jacket you've had your eye on.
Credit is convenient, but it's not free. When creditors grant you an extension of credit, they give you financial flexibility. But there's a cost. Creditors charge a fee for that financial flexibility. Every creditor has a different way of charging you, too. So it's very important that you always review all the documents given to you and the terms of your credit extension before entering into an agreement with a creditor. Typically, the fees you are charged with include some form of interest.
This section of our website explores the subject of finance in detail.