Six Steps to Financing a Car

A Guide Through the Auto Financing Process.

It is very important to read complete information before buying a car. Information is not only limited to features and specifications. You also have to read about its asking price. It becomes more important when you are financing a car with financial organizations. Here, we are providing details about 6 steps to financing a car which you have to keep in mind before buying.

1. Confirm the sum that you want to borrow

It is the very first step to decide the money that you can bear to spend before you start looking. You can scale the affordability of car purchase by using payment calculator and preparing a monthly payment budget for yourself.

2. Decide loan’s length

Generally, length of every new-car loans is in the range of 5-6 years. Longer ones are also available. You can cut short monthly payments with long duration; though, you end up paying more in auto financing costs. 0% financing is usually provided in shorter-term loans, making monthly payments higher but the total less.

3. Stick to price range

Select a car that would not over-extend you financially, either with initial down payment, monthly installments or costs of insurance and operating expenditures. Also, have a look at J.D. Power Quality Ratings for car of your choice -- higher-quality cars do better at maintaining their re-sale values and typically last longer, as well.

4. Do not forget extra expenses

Stay aware about extra charges associated with your car, including projected fuel, maintenance and insurance costs. You can view cost of ownership for brand new car and see how it rates in its section before deciding to buy.

5. Shop Around

Check on multiple showroom and online deals to ensure best deal available on both vehicle and interest rate on loan. Going to a showroom with own financing makes you a cash buyer, even though you are going to get a car loan through another source and simplifies whole process.

6. Know Your Credit

Get a copy of credit score and get prepared to have your credit history searched. This puts you in beneficial situation when it comes to finance rate you are being offered and it helps you avoid nasty surprises. Preparation for financing before time is the key. Interest rate you pay on loan is added to the bottom line -- take it as another part of negotiation while purchasing new car and you will achieve a significant benefit in the process because you will be well-equipped to deal with realities of financing.