How Does Car Financing Work?

If you’re getting ready to purchase a vehicle in Cody or Laurel, we’re here to help. Many customers ask us, “What does it mean to finance a car?” when they visit us in Billings. Financing a car is the process of buying a car, rather than leasing it. And while it’s the most popular option, not everyone knows exactly how car finance works. Let us shed some light on the process:

How Does Financing a Car Work?

Now you know what is financing a car, so how does financing a car work? Before you can buy your car, you’ll probably need to apply for a loan in the Red Lodge area. You can apply for financing through a dealership, bank, or credit union. Some savvy shoppers even apply to all three while seeking out the best deal possible! That’s because every lender has their own unique criteria based on factors like:

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

How Can I Get a Great Deal?

How does car financing work for those with bad credit? What is financing a car like for those with no credit at all? No need to worry! Whether your credit is perfect or less than stellar, you can get a great deal with a little research and perseverance:

• Do you have bad credit? Consider budgeting for a larger down payment. This can help you offset the impact of higher interest rates – see our payment calculator to start crunching numbers!
• Are you budgeting wisely? Some customers want to larger payments to cut back on interest, but you want to leave yourself some breathing room. Don’t forget costs like gas, insurance, and maintenance.
• Are you applying to multiple lenders? Time your applications strategically. You’ll want to apply within a 14 day period to prevent negative marks on your credit score.

Learn How Car Finance Works with Underriner Honda

If you’re still trying to figure out how financing a car works, contact us at Underriner Honda. From down payments to trade-ins and interest rates, we’ll let you know how car finance works in Billings without all the confusing jargon.