How Does Financing at a Car Dealership Work?
Used vehicles now cost 40% more than they did in the previous year. By all accounts, prices will continue to rise. One thing is now clear: car financing is now essential to be able to afford these higher prices.
Financing at a dealership is a great way to get a new vehicle. It offers you lower rates and doesn’t take much time to get approved. That said, how does car dealership financing work?
There are still a lot of supply chain issues, so things might take a while to even out. In this guide, we’ll discuss the process from beginning to end.
1. Bring the Right Documents for Financing at a Dealership
Before you head to the dealership, make sure you have the documents necessary for car financing. You can’t get dealership approval without them. In general, you should only need three documents:
- Driver’s license: this is not only your ID and current address, but proof you can test drive any vehicles
- Pay stubs: a dealership needs proof that you have solid finances, so proving regular income will be necessary
- Trade-in title: if you have a used vehicle and want to put it down for your payment, you need evidence that it’s yours
There may be other documents or proofs that you need. You may need references, proof of residency, or a working phone. You may need to put down a down payment.
Financing a car requires anything that can demonstrate that you are responsible and trustworthy. Call your dealership if you have any questions.
2. Choose a Financing Option
The most common method of car financing is through a bank. You ask for a loan and then use that loan to pay off the car.
But if you choose car dealership financing, you have two vehicle finance options:
- Indirect financing: the dealership sets up a financing option through a third-party
- In-house financing: you do vehicle financing directly, through the dealership
If you have bad credit, in-house financing makes it easier to get approved. However, if you have better credit and want lower rates, you’ll want indirect financing.
3. Sign the Paperwork and Budget for Your Loan
Read through the paperwork well. Make sure you check the fine print, and that you are ready to make this decision. Once you sign the paperwork, the decision will be final.
Congratulations! You’ve financed your car, and you’re ready to take it out on the road. Make sure to keep all the paperwork and keep track of the loan.
This may be the time to learn how to budget. Be sure that you can make monthly payments on your loan. Failure to do so could result in a lot of built-up interest.
Find the Right Dealership for Vehicle Financing
Financing a car is an important topic now that vehicle prices are higher than ever. If you do your financing at a dealership, come prepared. Bring your documents, choose the right loan, then make sure to pay it off on time.
Not sure where to start with financing? There’s a place in your neighborhood. Check out Red McCombs Drive Away Motors for the best vehicle finance options available.