How Does Car Financing Work?

2022 Nissan Altima Parked
If you’re looking to upgrade your Canton or Medina drives with a new or used vehicle, you’ll need to decide whether you’d like to purchase it outright, lease it, or finance it via a car loan. But, what does it mean to finance a car, and how does car financing work? Keep reading with Fred Martin Nissan, as we dive into the car financing process. Then, if you have any questions, feel free to reach out to our finance experts for assistance.

How Does Financing a Car Work?

The first step in financing a car is to apply for a loan through a dealership, a bank, or a credit union. You can apply for financing online or visit the dealer’s showroom and take care of the process in person. There are key factors that the lender will take into consideration, including:

  • Your credit score
  • The amount of the loan you’re requesting
  • The length of the loan
  • Your debt-to-income ratio
  • The age of the vehicle

If you know that you have a low credit score, or you don’t have a strong credit history, you may want to consider asking a family member or a close friend to cosign your loan.

Decide on a Lender

If you’re approved for a loan, there are a few different options that you can choose from. If the dealership provides in-house financing, you can compare their offer to a bank or credit union offer to see which offer is the best for your needs and budget. You’ll also want to consider how much money you can put towards a down payment and how much your monthly payments will be to ensure that you can pay back the loan.

Finalize the Loan Terms

You may need to negotiate the price before finalizing the loan and purchasing the vehicle. If this is the case, you and the salesperson can negotiate until you settle on a loan with an interest rate that works for you. From here, you can finalize the loan terms and close the deal.

Learn More About Car Financing with Fred Martin Nissan

The team here at Fred Martin Nissan is always here to help walk you through how car finance works. If you have any questions, please don’t hesitate to reach out to our finance department near Massillon. Our department works with over 20 lenders, and we’re diligent about helping our customers secure the best financing terms possible!

 

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