How Does Financing a Car Work?

How Does Financing a Car Work?
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When you’re ready to purchase a used car for drives around South Jersey or commutes between Reading and Allentown, you can either purchase outright, lease, or apply for financing. You might be asking yourself “What does it mean to finance a car,” so we’ve put together a quick guide to help you understand the financing process for a stress-free car-buying experience.

How Car Finance Works

Your first step is applying for a loan through a bank, credit union, or the dealership itself. You can always start online, or you can head to the dealer. Regardless of your choice, the lender will look at the following factors:

  • Credit Score
  • Loan Amount
  • Loan Length
  • Debt-to-Income Ratio
  • Age of the Vehicle

If your credit score is low or you don’t have a strong credit history, think about asking a family member or close friend to cosign the loan.

Choosing Your Lender

When you get approved, you’ll often have a few options from which to choose. Dealerships that offer in-house financing can compare their own offers with those of external lenders to see which one best fits your needs and budget. Consider how much money you can put down, the size of your monthly payments, and whether you know you can pay back the loan.

Finalize the Terms

Fittingly enough, finalizing is your final step. You’ll sometimes need to negotiate on price, which means you and the salesperson will work to settle on a loan and interest rate that works. You then finalize the deal, sign all the necessary paperwork, and take delivery of the vehicle.

Find Out More About Auto Financing with Our Philadelphia Team

Our handy online tools are available to let you apply for financing, value your trade, and estimate your payments, but you can also contact us directly for further car buying tips and help geting the perfect loan package. Don’t hesitate to contact us with any further questions about financing, such as, “what are in-house financing car dealers?”