If you don’t own a home, or if you don’t have enough equity in your home to borrow against, you’ll need a car loan. Financing through a dealer is convenient, but it can also be more expensive, because it’s another way for a dealer to make money from selling you your car. Also make sure the dealer’s loan terms aren’t set up to match your monthly payment. If the dealer knows what you can afford each month, he can structure a loan that meets that payment but still ends up costing you more than independent financing.

Before you go with your dealer’s financing, shop around to make sure you’re getting the best rate.

If you don’t have enough money for a standard down payment on a car, leasing might be the best option for you. Similarly, if you like to get different cars every few years and you are not interested in making changes to the factory settings on a car, a lease might be the best way for you to go.

But if you plan to keep your car for a number of years and you have a substantial amount of money for a down payment, you might find that buying a car is the best plan. When you buy a car, you might have to get a loan, but you can do as you wish to the car.

Arrange independent financing

Obtaining financing through an independent lender before you go car shopping can also provide savings. Dealer financing is often more expensive than car loans through banks depending on your credit rating. Sometimes an auto dealer may even make more profit from the financing than from the sale of the car.

Many dealers will try to get you to tell them what monthly payment you can afford. This leaves room for them to bump the interest rate up to that monthly payment level. They can then sell the loan to a lending institution and receive a commission based on the difference between what you’re paying in interest and what the bank normally charges. This can be costly for you. For example, on a $20,000, 48-month car loan, the difference between a 7 percent interest rate and 9 percent is slightly more than $900 over the term of the loan.

Be careful of zero interest loans

Although no interest car loans sound attractive, they may not be your best bet, particularly if you’re giving up a substantial rebate in return. Let’s say you’re buying a car for $16,000 and can pay zero interest for 36 months through the dealer or receive a $2,000 rebate. The monthly payment on a $16,000 purchase at zero interest is $444.44. However, if you take the rebate and finance through a bank at 5 percent, your monthly payment comes to $419.59. You save $24.85 a month, or $894.60 over three years.

Check your credit score

Before shopping for any loan, be sure to check your credit report and score to correct any inaccuracies that may hurt your credit rating. Also, if you know well in advance that you are going to buy a car, you can take steps to improve your credit score by removing certain risk factors, such as unpaid credit card bills, that may be causing a negative impact. Lenders largely base the rates they charge you on your credit score. So, by improving your credit, you may be able to get a better rate on your loan. This includes looking for any loans for single mothers.

Consider leasing

Leasing became popular in the 1990s as a way for people to afford a new car at a lower monthly payment than purchasing the car outright. Since you are not paying the entire purchase price for the car, monthly lease payments are typically less than monthly loan payments. Some new cars can be leased for as little as $200 a month or less. The downside is you have no resale value after the lease expires.

Watch for lease specials to get the best deal. But make sure you read the terms of the lease, including whether the advertised monthly payment includes sales tax and fees. Also, you should consider whether you’re paying a larger than average down payment to secure the lower lease rate.

These are just some of your options when it comes to buying a car and car loans for single mothers. You need to think about what you really need, and what is going to make the most sense for you when it comes to rate, term, and how long you plan on keeping your car. There you go, that is how to find loans for single mothers.

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