How Does Car Financing Work?

man and woman with car salesman

Once you’ve found your ideal new car in Lemon Grove, you’ll need to decide whether to buy or lease. What does it mean to finance a car? Let’s walk through your options for a well-informed car shopping experience.

How Does Financing a Car Work?

Understanding how car financing works will help you make the right decision for your new or used vehicle purchase. Car financing begins with applying for a loan, either directly through the dealership or via a bank or credit union. No matter which lender you choose, a variety of factors will be considered during the loan approval process, including your:

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

It’s always good to have a handle on your credit score before applying, as those without established credit history or a lower credit score could be faced with less favorable terms. If this applies to you, consider getting a responsible borrower to help cosign your loan.

Choose Your Lender

Comparing rates and terms between lenders is a smart way to find the best loan for your needs and budget. Using an online payment calculator can help you find a manageable down payment and ongoing monthly payment. One advantage of dealership financing is that you can apply online and see your options before making the trip to San Diego, giving you the confidence you need to borrow responsibly.

Finalize the Loan Terms

In order to find a monthly payment that works for you, negotiate the sales price with your salesperson. Remember to factor in how your interest rate and loan term will affect your monthly payment, as well as valuing any trade-in options. Once you’ve settled on an acceptable price and financing deal, the final steps involve signing the paperwork and driving your exciting new vehicle home to El Cajon! If you ever consider refinancing, learn how to refinance a car at San Diego Chrysler Dodge Jeep Ram.

Want to Know More About Car Financing in San Diego?

Need more information about how car financing works? The San Diego Chrysler Dodge Jeep Ram sales team is here with all the car buying tips you need to make a smart, informed purchase, like buying vs. leasing. We also offer a variety of new car specials to make your purchase even more affordable! Contact us with any questions.

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