How to Finance a Purchase
When it comes to deciding how to finance something, you should think carefully about the purchase and the type of financing you choose. Financing can be a responsible option when you need (rather than want) what you’re buying, you can afford the monthly payments and your credit score is high enough to qualify for the best personal loan rates and repayment terms.
Car-buying, home renovations, and other large purchases are examples of situations when you might want to consider financing. However, there are many other ways to save money and avoid taking out costly loans or debt, including saving up cash for big purchases.
Having liquid savings could be the cheapest way to finance a vehicle, especially if you can buy a used car with modern features, reasonable mileage and minimal damage. Getting preapproved or prequalified for an auto loan can also help you become a stronger negotiator at the dealership and move closer to your dream car.
If you’re in the process of starting a small business, there are several options for financing it. The type you choose will depend on how much money you need to get your company off the ground, and whether you’re comfortable with using debt or exchanging equity for funding.
Business loans are available from banks, credit unions, and private lenders, as well as government-backed programs such as the Small Business Administration’s 7(a) program. These loans may be fixed or variable, and they usually have lower interest rates than personal loans.
Angel investors and venture capital are two forms of alternative financing for businesses. These options don’t require you to repay the amount you receive, but they can come with stricter requirements for the company that gets the investment. For this reason, they’re often used to fund larger businesses. For smaller companies, you might want to look at a more traditional form of lending, such as a personal loan.