How Does Car Financing Work?

When looking to purchase a car, you’re met with two options: pay with cash or car financing. How does financing a car work, and what are the steps involved in the process? Learn the ins and outs of car financing with the financial professionals at the Valley Honda Finance Department!

What Does it Mean to Finance a Car?

What is financing a car? It’s pretty straightforward. When you choose to finance a car, you’re taking out a loan with the specific purpose of buying a vehicle. These loans can be obtained at a bank or credit union, as well as at many auto dealerships. In fact, Valley Honda offers in-house financing for our new and used Honda vehicles! And, unlike financing at a bank or credit union, you’ll get access to numerous lenders with our credit application. This means you’ll have multiple options as lenders compete for your auto loan! We work with a vast network of lenders, so we’ll ensure you get the best deal possible!

How Car Finance Works

How does car financing work? It all starts with the previously mentioned financing application. Once you’ve completed your application, lenders will look at a few factors to determine what type of auto loan you qualify for:

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

If you lack a credit history or know your credit score is on the lower end, you could benefit from having a friend or family member you trust to act as a cosigner.

Choosing a Loan

If you get approval for an auto loan, you might have a few different options to choose from. When choosing an auto loan, you’ll want to consider how much your monthly payments will be. Ideally, you want that number to fit comfortably in your budget, as well as the length of the loan and the amount of interest you’ll be paying in the long term. At Valley Honda, our finance team will work to make sure you’re getting the loan that works best for your needs and your budget!

Finalizing Your Loan

One benefit of how car financing works is: it can give you room to negotiate on a price if you have good credit. Before you finalize any loan paperwork, you can discuss the vehicle price and loan with your sales associate until you settle on a loan with an interest rate that works for you. Once you’ve reached an agreed-upon deal, you can complete any necessary paperwork and then drive home your new or pre-owned vehicle!

Explore Your Car Financing Options at Valley Honda

Still have unanswered questions about how car financing works? Want to discuss our finance specials? Get in touch with the Finance Department at Valley Honda today!