What Does It Mean to Finance a Car?

There are two avenues to getting behind the wheel of an Acura, and the most popular way is through auto-financing. If you’re a Richmond Hill driver shopping for a new or pre-owned vehicle for the first time ever, you may be wondering, “What does it mean to finance a car, and how does financing a car work?” Just like college loans or a mortgage, auto-financing is when you pay your way to owning a car by taking out a loan and paying it back on a monthly basis over a certain period of time. Learn more about how car finance works in the following guide so you know what to expect during the car buying process when shopping for a vehicle around Pooler!

How Car Finance Works

As we covered earlier, financing a car is the process of taking out a loan and paying it back over a certain period of time. Many people in Hardeeville can’t pay the full price of an Acura upfront, so that’s where financing comes in handy, but keep in mind that you have to pay interest as well. So, how does financing a car work? Here’s how it goes:

1. Find a lender. When it comes to finding auto-financing, you can either choose in-house financing through a dealer that works with multiple lenders like Southern Motors Acura, or you can go through a bank or credit union.
2. Apply for the loan. Once you’ve found a lender, you send in a financing application. It’s always recommended to “shop around” lenders and compare offers to get the lowest interest rate possible.
3. Finalize your loan term. Before you go through with buying a car and finalize your loan, you have the option to negotiate on a loan interest rate where you’ll go back and forth until you settle on an interest rate that’s best for you. One way to secure a lower interest rate is by making a larger down payment. When you finally come to an agreement with the lender, you’ll fill out the necessary paperwork, and then boom! You’ll be driving home in your car before you know it.

Before you apply for financing, keep in mind that lenders will take into the following factors:

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

If you don’t have good credit or a short-term credit history, it’s recommended that you get either a cosigner from either a family member or friend. It’s also a good idea to take care of anything negatively impacting your credit, such as taking care of late payments and disputing any potential errors you may have to get them removed from your credit report.

Learn More About Car Finance With Southern Motors Acura!

At Southern Motors Acura, our finance team works with customers of varying credit to get the best financing solutions. If you’re still wondering, “How does financing a car work,” a representative of ours will be more than happy to answer any of your questions. Contact us today to learn more.