To buy a car, you need to shop for your options, negotiate the price, then fund the purchase in a way you can afford. If you need to borrow money to complete the transaction, the type of loan that you pick is important. If you borrow wisely, you will spend less on your car, and you will have certain flexibility to change cars should you need to and to fund other goals within a few years.

To get the best auto loan rate in Utah you will have to check a couple of lenders to compare their offers. While you may have little room to change what they offer, you can plan yourself so that you will be able to afford the most convenient option on offer. Nonetheless, here are five types of auto loans that you will have to choose from:

The standard loan

Here, you get financing from traditional lenders like credit unions and banks. They offer options to buy both used and new vehicles. No other loan will be as simple as this one though you need an excellent credit score to even stand a chance. Fortunately, you have two options — to take an unsecured loan or a secured one. Note that the first one will have high-interest rates and will use the car as security so you will need to insure it. One of the biggest benefits of going this way is that the money may cover on-road charges and you will have flexible terms to make repayments.

Hire purchase loans

loan

Here, the financier will buy the vehicle and hire it to you for a certain period. It does not matter whether the customer is an individual or a business, the model is the same. You make payments per month that will pay out what you are owed within that period. One of the best features of this loan is that you can make lump sum payments. Besides, the interest rates will not change with time.

The financial lease

In this case, the lender purchases the vehicle and leases it. As the motorist, you get to use the car immediately without any capital outlay. Financial leases are given to businesses and people who want to use the vehicles for business. The motorist will pay a monthly rate that is fixed. They will also be responsible for maintaining the car. When the lease expires, they can choose to refinance, buy the vehicle for what charges remain, or return it.

The novated lease

In this case, you come to an agreement with your employer and the financier. You sacrifice a part of your salary to get vehicle benefits of the same value. The employer’s job here is to provide a deed to the lender, but the motorist covers all the costs of servicing, insurance, and registration. They maintain responsibility if they are no longer employed there.

The operating lease

Here, the financier will buy the car and rent to the individual while maintaining ownership. The motorist forgoes the risks connected with ownership even what remains when the renting period ends. When that happens, the motorist can choose to continue renting, to purchase the vehicle, or to leave the agreement altogether.

If you understand how the loans work, you are better equipped to make a good decision. When buyers lose perspective, they make mistakes like focusing on what you pay per month as opposed to the total cost and the purchase price. Make sure you are getting a car that you can realistically afford.