While it's easy to be tempted by the ads for new vehicles that offer 0 percent financing and other attractive terms, you may find that a brand-new car, truck, or SUV is still well outside your budget. Meanwhile, financing a used vehicle can be challenging -- with higher interest rates, more restrictive credit terms, and seemingly draconian limits on the age and mileage of the vehicle being purchased, you could find yourself at a loss as to how you can purchase a vehicle that is reasonable for your income and current debt level. Fortunately, there are a number of alternatives you may not have considered when it comes to auto financing. Read on to learn more about some of the factors that could drive your decision on how to best pay for your new-to-you vehicle.

Does the vehicle qualify for used financing at most lending institutions?

The easiest way to finance a new vehicle often involves lender financing. Most auto dealerships have someone on staff whose primary job is to arrange financing for all customers, even those with poor credit scores. With contacts at a number of local and national banks and private lenders, these dealerships can quickly jump through the necessary hoops on your behalf to get your loan quickly approved. However, this service isn't provided as a means of charity -- in most cases, the dealership receives some benefit from having you secure its financing, which can mean you wind up paying a higher interest rate or more closing fees than you would have while seeking a loan on your own.

This service can be well worth the money for many consumers, particularly busy parents who don't have the time to comparison shop or fill out multiple credit applications. But if you have more time than money, you may want to investigate non-dealer financing options through your local banks and credit unions.

Do you have an asset that can be tapped?

In some cases, you may be able to refinance an existing auto loan on a vehicle with some equity to score a lower rate and put some cash back in your pocket. This cash can then be used as a down payment on a used vehicle, giving you greater flexibility if you find that banks are unwilling to lend the purchase price of the vehicle with which you've fallen in love.

For those who own a home, a home equity loan or line of credit (HEL or HELOC) can provide you with a low-interest loan. Because the amount of the loan is based on the equity you currently have in your home, you'll have the flexibility to purchase a vehicle without regard to high mileage or old age. You'll even be able to deduct the interest you pay on your HEL or HELOC auto loan on your federal income tax return. 

Do you have impending large expenses (or an already tight budget)?

If you're expecting a large expense in the next few years, it may be in your best interest to take out the shortest-term loan possible (or find a long-term loan with no pre-payment penalty). While your monthly payment will be higher with a shorter-term loan, you'll have your vehicle paid off sooner -- as well as having already built a higher bill amount into your budget to help you adjust to the payment for your new roof, college student, or other significant expense coming down the pike. For situations in which your budget is already uncomfortably tight but you urgently need a new vehicle, extending the term of your loan can help lower your monthly payment to something more manageable.