Car Loan Financing

When purchasing a car from an auto dealer, whether new or used, one question you ask is what is car loan financing? The cost of your vehicle depends on the type of financing you obtain that is based on terms that are affordable to you. Absent paying for the auto in a single payment, these steps should help financing the car purchase a success. These steps include: negotiating a price for the car, shopping around for loan rates, calculating the payments, sitting with another lender and signing the approved loan.

Before you can apply for a loan, you need to negotiate with the car salesperson to determine the purchase price of the vehicle. It is during the negotiation stage that you learn of any manufacturer rebates and other incentives. This also gives you the opportunity to "haggle" with the salesperson to lower the price even more. There is an art to successful negotiations. You should have a price in mind that you are willing to pay but want to extract as many price concessions you can before you reach a mutually acceptable amount.

When the price negotiations have concluded, the auto dealer is going to offer you a financing package, based on your qualifications. This offer may not represent your best deal. You should seek other rates from outside the dealer to determine whether you can go outside and save money or if the offer made by the auto dealer represents the best deal for you.

If you have not already done so, you should do a budget to determine how much of a payment is affordable. It would not be realistic to agree to a $400 a month payment if your current financial situation only permits $300. A careful review of your budget will tell you how much car you can afford. Doing the budget may also reveal areas you may wish to trim or cut outright, freeing up additional money to apply toward your car payment.

After receiving an offer from either the outside lender or auto dealer, you should seek a second look from another lending institution. This helps you to determine if you received the best offer available. Since you will be responsible for repayment of the loan, it is important to consult with all possible lenders to see what they can make available to you in your price range.

When you are satisfied with the terms of the best offer, you can accept the loan. This is done through the execution of the loan documents with your signature. Once this acceptance has taken place, you have completed the financing process and are able to enjoy your purchase.

The steps to a successful car financing start with you getting the best price for the vehicle you want. Be prepared to negotiate the price and shop around for the best available loan rates. Only accept the loan whose terms and rates are satisfactory to you and are within your price range.