A Step-by-Step Guide to Financing Your Next Car
How to Finance a Car and Apply for a Loan
With the exception of a home, a car is likely one of the biggest purchases you’ll make in your lifetime — and unless you’re planning to pay for it all in cash, you’ll need to secure a loan. Financing a car and applying for a loan may seem intimidating — especially if it’s your first time buying one — but we’re here to guide you through the entire process. Keep reading to learn how to finance a car with a loan!
What is Financing a Car?
Before we discuss how to finance a car, we need to start with the basics — what exactly does it mean? When you finance a car with a loan, you borrow money from a financial institution to purchase the vehicle and repay it over time. Similar to any other loan, you’ll accumulate interest and fees as time goes on.
When it comes to car financing options, you can choose from banks, credit unions, online lenders, finance companies, and car dealerships. Trying to obtain a car loan through an outside lender can be cumbersome, but our finance center makes it easy. At M&L, our working relationship with certain banks allows us to offer our customers great rates.
How to Finance a Car With a Loan
Now that you know what it means to finance a car, let’s take a closer look at how the process works. These steps can help you get one step closer to getting approved for a loan and driving home in a new car.
1. Check Your Credit Score
As you begin the car financing process, it is important to check your credit score before shopping for a loan. This three-digit score shows the lender that you can be trusted and is extremely important when determining what type of loan you are eligible for. If you have a high credit score, it should be easier for you to obtain a better car loan with a lower interest rate. However, consumers with a low credit score can expect to pay a higher interest rate, and should consider improving their score before financing a car.
2. Set Your Budget
While many potential buyers pick out a car before figuring out their finances, setting a budget should be one of the first things that you do. After all, no one wants to fall in love with the perfect car, only to discover that it’s outside their price range. If you already own a car, consider finding a new one with a monthly payment that is similar to what you’re currently paying. And if this is your first time financing a car, review your budget and determine how much you can afford to spend on monthly payments.
3. Research Financing Options
Every company will offer different incentives, interest rates, and terms, so it is important to do your research before making a final decision. When comparing financing options, make sure you look into all the numbers — not just the monthly payments. Pay attention to other factors like term length, additional fees, and how much interest you’ll pay over the life of the loan. In general, the more money you can put down upfront and the shorter the term length, the more money you will end up saving in the long run.
4. Apply for Financing
Now that you’ve done all your research, it’s time to get pre-approved and apply for a car loan! While this can be done in person at a bank or credit union, we make it easy by offering an online application. Simply answer some basic questions about yourself and provide detailed information about your finances and employment history. Although this process may seem tedious, our finance experts will guide you through it.
Financing Your Next Car at M&L
Purchasing a car is one of the biggest financial decisions an individual can make — but luckily, you’re not in it alone! When you buy a vehicle from M&L, our industry-leading finance professionals will be there to guide you every step of the way.
Now that you know how to finance a car and apply for a loan, it’s time to take the next step towards buying the car of your dreams. Take advantage of our dealership’s finance center and get one step closer to driving home in a new vehicle.