How Does Car Financing Work?

Posted: Saturday, May 25th, 2019

Are you shopping for a quality car for sale near St. Louis? If so, you may be wondering, “What does it mean to finance a car,” or “How does financing work?” Green Light Auto Credit can help you understand the basics of car financing, how it works, how to get a car loan with bad credit, and when it’s the right choice for you whether you’re a veteran or first-time car buyer. Read on to learn more!

What are the Steps Involved in Car Financing?

First, apply for a car loan via a dealership, credit union, or bank. Typically, lenders consider the following factors when evaluating your application:

  • Credit score
  • Loan amount
  • Length of loan
  • Debt-to-income ratio
  • Vehicle’s age

Green Light Auto Credit makes it easy to apply for financing from the comfort of your home or office. Even if you have bad credit or no credit, our team can help find solutions, so you can drive home to St. Charles in the car you want. If you know your credit score isn’t great or you have zero credit history, consider asking a family member or close friend to cosign on your car loan.

Decide on a Lender

Green Light Auto Credit has access to lenders across the country. So, if you’re approved for an auto loan, you’ll have a few different options at least. You can compare different rates and terms to see which makes the most sense for your monthly budget. Before you apply, it’s always a good idea to decide how much you can put down on a car and how much you can afford to pay on a monthly basis.

Personalize the Car Loan

You’ll need to negotiate a price before finalizing your auto loan. This process can be as quick as you first doing your homework and agreeing to pay the asking price, or going back and forth with the sales associate until terms are reached. After you and the sales associate have decided on a price, you’ll close the deal. Next, you’ll sign the paperwork and be free to ride home to Florissant in your newly purchased vehicle.

Happy customer of Green Light Auto Credit

How Can I Get Financing With Bad Credit?

Applying for financing with bad credit can be stressful. True, it’s easier to get car financing with good credit than it is with bad credit, however, there are steps you can take to improve your chances of getting an approval:

  • Save Money for a Down Payment: Plan ahead for financing by saving as much as you can for a down payment. Generally, dealerships like to see a down payment of around 20% of the car’s price. Although if you opt for guaranteed financing, you’ll likely be expected to make a down payment of about 10%.
  • Check Your Credit Score: If you’re considering taking out an auto loan — or any kind of loan — it’s important to know where you stand in terms of credit. If you have outstanding balances, create a plan for paying them off.
  • Pre-Qualify Ahead of Time: Before you start shopping, apply for financing to see how much you’re approved for. This can help you decide whether you should use a cosigner or research the types of loan options available to you.

Learn More About Car Financing With Green Light Auto Credit!

Now that you know the answer to the question, “How does financing a car work,” you can move forward and make an informed decision. If you have additional questions, such as, “Can you transfer a car loan to another person?“, contact us at Green Light Auto Credit! Our team of finance experts can help you explore your car financing options and find the right car for your budget.