If you plan to buy a new or used vehicle, you’ll need to figure out how to pay for the purchase. Auto financing gives you the opportunity to buy a quality vehicle even without the money upfront. Review this auto financing guide before you start shopping for your next vehicle.
Car financing is a loan from a financial institution to pay for a vehicle. The lender may be a bank, credit union, or finance company. They charge interest on the amount of money borrowed and hold the vehicle’s title until the loan is paid.
When applying for car financing, you’ll look at either a new car loan or a used car loan. New vehicle loans typically have the best rates and terms as long as seven years on some models. Used vehicle loans have shorter terms, with many of them requiring the loan to be paid in three or four years (36 or 48 months). Interest rates are often higher with a used car loan as well.
Your first step is to fill out an application with your personal information and employment. The lender will perform a credit check and verify your employment and any references you provided. Once they have approved you, the finance team will let you know how much you qualify to receive. After you choose your vehicle, you will make monthly payments until the balance of the loan is repaid.
With numerous lenders offering auto financing, you’ll want to compare your options. Look at the interest rates and loan terms to decide which loan gives you the better deal. Also, consider your monthly payments and how they fit into your budget. Finally, consider any fees that come with the loan. You’ll also want to know if you must pay a fee to pay off a loan early.
The biggest benefit of auto financing is that it allows you to get a more expensive model than what you could afford if you paid cash. Most people don’t have $20K or more to pay out in cash to buy a new vehicle. Auto loans allow you to pay for the vehicle over time.
Before you apply for car financing, do the following:
Work with a dealership like Bentley Hyundai for your auto financing in Huntsville, AL. Our lenders have access to multiple loan products and can match you to the right loan for your budget and needs. Apply for financing today.