So How Does Car Financing Work?

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What does it mean to finance a car, and how does financing a car work? There are three main ways to buy a car: purchase it outright with cash, lease it, or finance it. Financing a car is a very common process, including in Lakewood. Financing a car is the process of getting a loan for a car purchase. Read on to learn more about how car finance works, from the experts at Tacoma Dodge Chrysler Jeep Ram. Contact us for more information!

How Car Finance Works

To attain a car loan, first you must apply for a loan through a dealership, bank, or credit union. A good tip is to apply to several institutions at once, not just to shop around, but so that it only counts as a single credit pull event. Lenders look at factors such as the following: 

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

How Car Finance Works: Select Your Lender

Once the lender’s offers come in, compare them thoroughly to choose the best option for you. Putting more money down up front will not only make your loan total smaller, but will save you money in the long run. Remember that the total amount you will pay monthly on the car is not just the car loan, but insurance, gas, and maintenance as well. 

How Car Finance Works: Finalize the Loan Terms

Before finalizing the loan using it to buy a car, negotiate on price and interest rate to the best of your ability. Once this is done to your satisfaction, you can finalize the loan terms and complete the deal. Once you sign the paperwork and take delivery of the vehicle, you’re free to cruise the streets of Spanaway!

Learn More About Car Financing with Tacoma Dodge Chrysler Jeep Ram!

Be sure to check out our value your trade tool and vehicle finder service to help you plan for your next vehicle! We offer assistance to all Gig Harbor drivers and beyond. Do you have more finance questions? Take a look at our Car Buying Tips where your can learn the advantages between buying or leasing or if you can trade in a financed car and much more.

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