How Does Car Financing Work?

Couple at Dealership

When Indianapolis drivers decide that buying a car works better for them than leasing, what’s next? If your trade-in and cash payment aren’t enough to cover the full amount of your car purchase, you’ll need to finance it. Here’s how car financing works.

What is Financing a Car?

Financing a car is another way of saying that you’re taking out a loan, which will be for the amount you need to pay for the car, plus interest on that amount. You’ll apply for a car loan, through Terry Lee Hyundai’s finance department or your bank. You can apply through multiple lending sources in Carmel and shop for the best interest rate and payback terms. When considering your acceptance and interest rate, lenders will use these criteria:

  • Credit Score
  • Debt-to-Income Ratio
  • Age of the Vehicle
  • Loan Amount
  • Repayment Term / Length of Loan

Lower credit scores can mean higher interest rates. Knowing your credit score before you apply for car financing can help you plan accordingly.

Find an Auto Loan Plan That’s Right for You

Before applying for auto financing in Avon, find out how much you can afford to spend on your car purchase.

  • Making a bigger down payment means taking out a smaller loan, and paying less in interest. Save for your down payment, and if you already own a car, you can use its trade-in value towards the down payment.
  • Remember to include the cost of gas, insurance, and maintenance when you’re making your calculations. Drivers who make the largest possible payments will save money in the long term, but if your monthly payment is too high, any unexpected costs can result in a major setback. Calculate your payment online to come in prepared.
  • If you decide to apply for financing at multiple locations, make sure to submit all of your applications in a short amount of time. Doing otherwise could negatively impact your credit report.

Closing the Deal

Once you’ve been approved for a loan and know how much money you have to spend, start car shopping! You’ll have opportunities to negotiate the car’s final price and add packages to your vehicle.

Save Money with Terry Lee Hyundai’s Great Deals!

Make your auto loan go further at Terry Lee Hyundai by checking our new Hyundai specials. Have additional questions about car financing, leasing vs. buying, or what is good mileage on a used car? Contact us today! While you’re here, you can compare the 2020 Hyundai Santa Fe and the 2020 Kia Sorento and learn more about the Hyundai Roadside Assistance package.

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17665 Terry Lee Crossing • Noblesville, IN 46060

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Terry Lee Hyundai 40.044613, -85.993125.