We believe that financing your new vehicle should be just as simple as finding it! You’ve done your research, kicked the tires, budgeted for a car … now it’s time to complete the final steps and cruise home in your new ride! But many drivers are unsure about the best way to finance their vehicle – especially if their credit history is less than ideal.
Here at Hoover Chrysler Dodge Jeep RAM, our experienced team can help! Read on to learn more about choosing the right financing solution, then stop by to get started!
Quick Rundown of Car Financing
Our vehicle financing specialists have provided some basic details below to help you make the most informed decision. First off, let’s define car financing in simple terms: When you finance a vehicle, an institution lends you the money needed to make your purchase. The borrower must then pay back the amount (plus interest) over a predetermined number of months. Lenders include credit unions, banks, and online sources. Many car dealers near you offer in-house financing as well!
Keep in mind that borrowing from a credit union or bank may be more cost-effective because these lenders often offer lower interest rates. Whether you choose a bank loan or finance through your hometown dealer, part of your monthly payment will go toward paying back the loan balance (principal) and part will cover the interest.
The car loan payment you make each month is determined by the amount you borrowed, the interest rate you secured, and the length of the loan term. The more money you need, the more you must pay back!
Once you repay the loan in full, your lender will usually send a lien release document to the state transportation agency. The car’s title will then be updated and transferred to you.
Different Car Financing Options Available
Direct Lending
This option involves borrowing money directly from a bank, credit union, or finance company.
Direct lending details the credit terms in advance, so we recommend getting pre-approved before you even start your car search. Knowing the annual percentage rate (APR) you’ll pay as well as loan term length will give you a more accurate idea of how much you’ll pay for your new ride. Armed with these details, you’ll be able to compare “out-the-door” prices between dealers and ultimately, score the best deal available!
Dealership Financing
Financing directly through the dealer may come with exclusive perks. Many car dealers near you maintain relationships with banks and credit unions, so you’ll enjoy access to multiple options. Your local CDJR dealership may also offer manufacturer-sponsored, low-rate or incentive programs! Eligibility may require a bigger down payment or shorter loan term, but can be a great option for some borrowers!
Accessing Your Financial Situation
Purchasing a vehicle will, of course, impact your financial standing. It’s important to carefully consider the impact of a monthly car payment on your budget, and to make sure that you don’t stretch yourself too thin. Don’t forget to factor in additional fees like auto insurance, routine maintenance, and more.
A car loan payment adds to your monthly financial burden, while also increasing your debt-to-income ratio (DTI). Because this figure is a good indicator of your buying power (and ability to pay back the loan), lenders consider your DTI (monthly debt payments divided by monthly gross income) when setting interest rates.Our team will work hard to secure the most competitive rates for your auto loan, no matter your credit score! While we welcome customers from all financial backgrounds, it’s no secret that securing a loan with a good credit score will save you hundreds of dollars!
Researching and Comparing Options
Follow these simple steps when determining which vehicle perfectly matches your lifestyle:
- Consider your needs.
Think through how much space you need for cargo and crew, which safety features are essential, what kind of towing capacity you need, fuel economy, etc. This will help determine which type of vehicle you need, so you can narrow down your search. - Compare models.
Once you’ve settled on a vehicle type, start comparing models. Online comparison tools are a convenient way to get the job done, so you can shorten your list before arriving at the dealership. - Conduct research.
Once you’ve created a list of potential vehicles, do a little research online to learn more about each one. Or just contact your local CDJR dealership with any questions! - Set your budget.
Determine how much you can afford to pay each month – and then stick to your budget! - Decide between a lease or loan.
If you’re looking for a long-term investment, buying is likely best. But if you’d rather upgrade to a newer model every few years, a loan may be the better option.
This strategic approach can help keep your car search on track, but we also encourage shoppers to keep an open mind. While you may have your heart set on a particular model, a similar vehicle in its class may, in fact, be an even better fit.
Have More Questions About Car Financing? Contact Hoover CDJR Today!
If you’re still struggling to determine which type of financing is best for your car purchase, feel free to get in touch! Here at Hoover CDJR, our finance experts are always happy to talk through your options! We can’t wait to put you in the perfect new Chrysler, Dodge, Jeep, or RAM vehicle, so come see us today!
Categories:
Financing