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Financing Explained
Everything you need to know about car financing
From loan basics to getting the best rates, we'll guide you through the financing process.
Financing Basics
Understanding the fundamentals
Principal
The amount you borrow to purchase the vehicle, minus your down payment.
Interest Rate
The annual percentage rate (APR) you pay to borrow money.
Term Length
How long you have to repay the loan, typically 3-7 years.
Down Payment
Upfront payment that reduces your loan amount and monthly payments.
The Financing Process
Step-by-step guide to getting financed
1
Check Your Credit
Review your credit report and score. Higher scores typically qualify for better interest rates.
- • Excellent: 750+ (best rates)
- • Good: 700-749
- • Fair: 650-699
- • Poor: Below 650 (higher rates)
2
Get Pre-Approved
Apply for pre-approval to know your budget and strengthen your negotiating position.
- • Know your budget
- • Lock in rates
- • Shop with confidence
- • Negotiate better deals
3
Compare Options
Shop around for the best rates from banks, credit unions, and dealer financing.
- • Banks and credit unions
- • Dealer financing
- • Online lenders
- • Manufacturer incentives
Payment Calculator
Calculate your estimated monthly payment
$0
Monthly Payment
$0
Total Interest
$0
Total Cost
This is an estimate. Actual rates and payments may vary based on credit score, lender policies, and other factors.
Tips for Better Rates
How to qualify for the best financing terms
Do This
- Check and improve your credit score before applying
- Save for a larger down payment (20% or more)
- Shop around and compare offers from multiple lenders
- Consider shorter loan terms for better rates
- Get pre-approved before shopping for cars
- Consider certified pre-owned vehicles for better rates
Avoid This
- Applying for multiple loans in a short period
- Accepting the first offer without shopping around
- Extending loan terms just to lower monthly payments
- Financing more than 100% of the vehicle's value
- Ignoring the total cost in favor of low monthly payments
- Adding expensive extras to your loan
Types of Financing
Understanding your options
Bank/Credit Union Loans
Traditional financing through financial institutions.
Pros:
- • Often competitive rates
- • Direct relationship with lender
- • Pre-approval available
Cons:
- • Requires separate application
- • May have stricter requirements
Dealer Financing
Financing arranged through the car dealership.
Pros:
- • One-stop shopping
- • Manufacturer incentives
- • Convenience
Cons:
- • May not offer best rates
- • Limited to dealer's partners
Manufacturer Financing
Special rates offered by car manufacturers.
Pros:
- • Often lowest rates
- • Special promotions
- • Cash back options
Cons:
- • Limited to new vehicles
- • Requires excellent credit
Ready to Get Financed?
Start your car buying journey with confidence