In today’s modern world, there are decisions that we are faced with on a daily basis. Purchasing a car is one of those decisions that should not be made lightly. Next to our homes, a car is probably one of the biggest investments that we will ever make. Therefore, when financing a car, it is very important to know what you are getting into. Look at fine print. It is well known throughout the industry that car dealers make money off of the financing. There are several types of car loans that dealers will try to sell you on: The best auto loan for most consumers is the traditional type loan. This is where you put so much money down, so much in interest, figure out your monthly payment and at the end of the terms you’re paid off. If you have good credit you can find interest rates as low as 0%. Many times, car manufacturers give the public incentives to buy a certain model. If you’re buying an expensive newly released popular model don’t expect to find any incentives at all. Auto leasing is another option that is available to the every day car consumer. Auto leasing is a great option for companies since the payment is 100% tax deductible. Its also a great way to drive a new car every two years so long as you don’t go over mileage limits. The car is leased to you at a pre-determined amount of miles that you are "supposed" to drive. If you go over, you can either buy the car back from the leasing company at the "residual value" or pay the penalties. The residual value is the monetary value that the manufacturer gives the car after a certain amount of years. The other option is to pay the leasing company a penalty for every mile over your limit. This amount is sometimes around 26 cents per mile. If you have driven a lot miles, this can become quite costly. However, if you decide to buy the car, you can either pay cash or re-finance. This becomes a very expensive way to purchase a car. Leasing is good if you are going to take a tax deduction for your business. If you are going to drive the car very little and plan to get a new one in two years leasing is for you. But, if you are looking for a less expensive way to buy a more expensive car, you are better buying something less expensive. You will thank yourself in the long run when you’re car is paid for! A balloon note is basically another way to lease a car. In the long run, it is also going to be much more costly. You are agreeing basically to finance only part of the price of the car. The difference is also based on residual value. Again, you are going to have to pay cash, refinance the car, or try selling it for as much as you can.