How Does Car Financing Work?

February 3rd, 2019 by

Car Key and Pen on Documents

If you’re getting ready to buy a new Ford or used vehicle in the Collinsville area, you’re likely trying to find out how car finance works, especially if you’re a first-time buyer. Auffenberg Ford North is here to answer all your finance-related questions, from “What is financing a car?” to “What does it mean to finance a car?”

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How Does Automotive Financing Work?

Once you know what vehicle you want to purchase, you’ll apply for a loan through the dealership, a credit union, or a bank. You can apply online to get started, or you can apply in person. In order to determine if you’ll be approved, the loan lender will look at:

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

Financing with Bad Credit

If you know your credit score is low, you have a limited credit history, or you have a lot of debt, consider asking a family member or close friend to cosign your loan. This improves your chances of being approved, and it can help you get a better interest rate.

Choose Your Automotive Financing Lender

If you’ve applied and been approved for a loan through different lenders, your next step will be to choose which lender to work with. If the dealership you’re buying from offers in-house financing, you can compare their offer to offers from a bank or credit union. Determine which option best suits your budget, taking into account how much you can spend for a downpayment and how much you can afford each month.

Finalize Your Automotive Loan Terms

After you’ve negotiated the purchase price and determined how much you can afford, it’s time to finalize the terms of the loan. At this point, you can negotiate the interest rate of your loan, and once you’re happy, you can sign the paperwork, take delivery of your new vehicle, and head home to Fairview Heights, Granite City, or the surrounding area.

Learn More About Car Financing in O’Fallon

To find out more about automotive financing or leasing at Auffenberg Ford North, contact us online, or visit us in O'Fallon to speak to a member of our finance team about our Ford crossovers, trucks, and SUVs.

Posted in Finance