How to Finance a Car
Are you interested in purchasing a new or pre-owned car, but are unsure about how to go about financing it? Our team here at Ira Toyota of Manchester is dedicated to educating our fellow drivers in Amherst, Manchester, and Derry when it comes to all things automotive. Accordingly, we've come up with the following step-by-step guide to realizing this vital aspect of owning a car. Read on to learn all about how to finance a car.
1. Finance Terminology
It's important that you become familiar with the language that will be used when you meet with a specialist about financing a vehicle. Here are the most important terms to keep in mind:
- Car Loan. A car loan is the name for the agreement that you make with the lender. It simply states that they agree to provide cash for the purchase of the vehicle, while you agree to pay it back over a specified period of time.
- Down Payment. A down payment is the amount of money that you initially pay. The amount of money that you end up financing is the difference between this payment and the full price of the vehicle.
- Interest. The interest you pay on top of your actual loan is the cost that the lender charges for providing you with this money.
2. Keep an Eye on Your Credit Score
If you're working toward the goal of owning a car, make sure that you're maintaining a healthy credit score. Accordingly, be sure to stay on top of it. A good credit score can help you get a lower interest rate.
3. Why a Down Payment is Important
As stated above, the down payment is the amount that you pay up front. Making this payment can help you get a better loan deal. When you put down a larger amount of money, you have a higher chance of getting a smaller loan, a lower loan payment, and a shorter loan term.
4. Applying for a Car Loan
In order to find the best deal on a loan, it's wise to apply for financing with a few lenders. By doing so, you can get a feel for the kinds of loans you're able to get at this time and choose which one fits in the best with your financial situation.
It's important to note that submitting several loans over an extended period of time can result in your credit score taking a hit. To avoid this, consider doing it within a matter of days or weeks rather than a few months. Filling out the applications in a shorter period of time like this will prevent it from seeming like you're applying for several loans.
Finance Your Next Car with Us Today
If you're in Amherst, Manchester, or Derry and you have questions about the above information or you would like to discuss your financing options, visit the team of experts in our finance department here at Ira Toyota of Manchester to get started.