How Does Financing a Car Work?

You might know just what make and model you want, but do you know how car finance works? Many Cincinnati drivers find themselves intimidated by all the paperwork and math involved, but the process is easy and straightforward with the right team by your side. At Joe Morgan Honda, we’re here to walk you through every step of the auto financing process, so you can drive back to Middletown with a smile! Find out how does financing a car work:

What Does it Mean to Finance a Car?

So, what is financing a car in the first place? Financing is the process of paying off your car’s price through the use of a loan. You might apply for financing through a dealership, a bank, or a credit union – or all three options! Once your application is in, the lender will judge your creditworthiness based on factors like:

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

Your credit score also plays a big part in this process. If you have a poor credit history, you might get offers with higher interest rates around Lebanon. However, our finance team can work with you to find affordable options that fit your budget. You can even check out our tips for improving your credit score.

How Do I Find a Good Deal?

Research is key when starting the auto financing process. Here are a few things to keep in mind:

• If you have poor credit, a bigger downpayment can help you get a better financing deal – even if you end up with a higher interest rate. Trading in your vehicle can also bring down your monthly payments.
• Be sure to triple check your budget, and be honest about how much you can spend. Don’t forget to include costs like gas, insurance, and maintenance when trying to set a reasonable monthly budget in the Payment Calculator – and build in wiggle room for emergencies.
• If you want to apply to multiple lenders, submit all of your applications in a short timeframe. Otherwise, you could hurt your credit score.
• Negotiate before you finalize your deal. You can also add additional packages and insurance if you’d like.

Start Planning with Joe Morgan Honda

Now that you know how does car financing work, are you ready to find the perfect car for your Monroe travels? If you lease a new ride, you can learn more about how you can pay off your car loan early. Visit us at Joe Morgan Honda to take a test drive in the model of your choice, or contact us with your questions.