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Your Guide to Florida Auto Loans, Leasing, and Buying With Cash

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When financing a car, many options are available to Florida residents. Options are a beautiful thing, but they can also be overwhelming. If you’re in the market for a new or new-to-you car, read on to learn all about Florida auto loans, leasing, buying with cash, and much more.

First Stop: Auto Loans

Auto loans are often the first thing that comes to mind when exploring car financing options. An auto loan lets you borrow money from a lender to purchase a vehicle.

Loans are available in various shapes and sizes with different repayment timelines and interest charged throughout the loan. These factors primarily depend on your credit score; the better your score, the better your loan terms.

Auto loans are a popular way to pay for a new vehicle. Approximately half of the people in this survey said they used an auto loan to finance their most recent vehicle.

With any financial decision, there are things to consider before applying for an auto loan. Benefits of an auto loan include:
  • Instead of paying for the car all at once, you’re spreading out payments over time, which is more budget-friendly
  • At the end of the loan term, you own the vehicle outright
  • Your credit score will improve if you pay on time, every time
On the other hand, the pitfalls of an auto loan might be:
  • Once you take ownership of the loan, the car’s value depreciates, and if you owe more than the car’s worth, that’s called being upside down on your loan
  • If your credit isn’t good, monthly payments can be pricey
  • You could damage your credit score if you don’t pay on time each month
To get the best auto loan possible, you should have a good credit score and a steady income stream. When it comes time to apply for the loan, plan to have the following documents on hand: proof of income, proof of residence, and sometimes a down payment.

Second Stop: Leasing

Another option for financing a car is leasing. Instead of paying for the vehicle, you are paying to use it. You agree on a set time to utilize the car and the number of miles you’ll drive, and your payments are based on these calculations instead of the purchase price. 

Fewer people are leasing cars today compared to years past. At the start of 2020, about a third of Americans leased their vehicles, but that fell to about 17% in July of 2022. 

One big reason for the decline is an increase in monthly leasing payments. Plus, with the inventory issues brought on by the pandemic, many people don’t want to shop for a new car every few years. Also, many drivers decide to keep their vehicles at the end of the lease instead of turning them in.

However, if you can lease a car for less than the monthly price of an auto loan, it might work better for your budget. You can often lease a vehicle with $0 down if you have strong credit. At the end of the term, you can keep the car or trade it in.

To lease a car, you should have the following documents: employment details, driver’s license, proof of auto insurance, and possibly proof of residency.

Third Stop: Cash

Last, you could also purchase a new car with cash. About 38% of people in this survey bought their most recent vehicle with cash, and the most likely population is Gen Z. There are some advantages to paying with cash, such as:
  • You aren’t paying interest on your vehicle
  • You don't have a monthly payment
  • You will likely be able to negotiate a better price
When paying with cash, the transaction is complete immediately and you don’t need to worry about continuing to pay for your car. However, there are also disadvantages:
  • You diminish your savings account
  • Opportunities to invest your cash are now eliminated
Buying a car will deplete your funds if you run into an emergency and require extra money quickly. Of course, this depends entirely on your budget and liquidity available.

When financing a car, it’s essential to consider your financial and credit situation when selecting the best option. Before deciding, talk to the experts on Florida auto loans by contacting Power Financial Credit Union today.