How Does Car Financing Work?

Tiny car with coins and finance paperwork
 

Had enough of your older vehicle? Is it more trouble than it’s worth? When you’re ready to purchase a newer used vehicle or certified pre-owned vehicle for Mooresville drives, you have three main options. You can purchase it outright, lease it, or apply for financing by taking out an auto loan. 

But what does it mean to finance a car? How does financing a car work? We’re here to help you understand this process so you can enjoy a stress-free and well-informed car-buying experience. Read on to discover how car finance works from the expert team at Hi-Line Autohaus.

How Does Financing a Car Work?

The first step to learning how car finance works with a used vehicle on our lot is to apply for a loan through us, a bank, or a credit union. You can start the application online for convenience ahead of your test drive or afterward. If you’re confident after your test drive, you can apply for an auto loan in person at the dealership. 

Factors that the lender will look at include:

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

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

How does financing a car work? The process is pretty much the same, no matter what state you live in or what dealership you choose. Follow some steps to learn more.

Select Your Auto Lender

If you are pre-approved for a loan, you might have a few options to choose from when deciding which lender to go with. If the dealership offers in-house financing, compare their offer to a bank or credit union to see which makes the most sense for your needs and budget. Take a look at how much money you can use for a down payment and how much your monthly payments will be to ensure you will be able to pay back the loan in a timely manner. 

One thing to think about is going through your local bank or credit union. They might be a little easier to deal with since they can see your larger financial picture, your current financial status, and your recent payment history if you’ve been paying any debts through your bank account.

Finalize the Loan Terms

Before finalizing your loan and buying a vehicle, consider negotiating the price. You and the salesperson can go back and forth on the terms until you settle on a loan with an interest rate and monthly payment that works for you. Once you finalize the details, sign the appropriate forms and close the deal. Once you sign the documents, you’ll take delivery of the vehicle and drive home to your Matthews garage behind the wheel of your new-to-you vehicle!

Finance a Used Vehicle From Hi-Line Autohaus

Now you know how car finance works. Ready to put this knowledge to good use? Contact us or call 704-532-9200 to schedule a test drive. We’ll also answer any questions you have about the automotive finance process. Our finance department near Huntersville is ready to help in any way we can! 

 

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