Once you’ve decided to buy a new car and you’ve narrowed down your options, one of the next steps in the car-buying process is figuring out financing. With the specialized lingo that many people in the industry use, it can be difficult for some shoppers to fully understand all their options when it comes to financing. Our team at Pfeiffer Used has put together an easy guide to help you with some of the terms.
Types of Financing
There are two basic types of financing: direct lending and dealership financing. When you choose direct lending, you work directly with a bank, finance company, or private lender to create a contract that helps you cover the cost of the vehicle. This offers you comparisons if you choose to shop around, and you can also determine credit terms in advanced.
Dealership financing is more common, largely because it’s convenient. Dealers typically shop around for the best rates, finding lenders for you. Because you’re letting the dealership do the work for you, you may not know all the terms in advance; however, some dealerships may be able to find special deals because they can quickly and efficiently shop both nationally and locally.
Before You Finance
In addition to understanding the difference between direct and dealership financing, you should also follow basic steps before you choose to buy or lease a car:
Start saving for a down payment (about 10 to 20 percent of the sticker price)
Talk to your insurance company to figure out how a new car will affect rates
Be sure to account for taxes, title, and registration fees as well, as some of these expenses can add up. If necessary, you can often add this to the amount you borrow.
What You Need
To finance a car, you’ll need a list of things. After completing a credit application, most dealerships will check your credit score to make sure you can borrow money. Additionally, you’ll need the following:
Social Security Number
Income Information (gross income, employment info)
Title from Trade-In Vehicle (if applicable)
You should also check to make sure there’s nothing extra you might need to bring. Many prefer to bring a friend or family member to wait with them while they finance.
For more information about financing, budgeting, or what to bring with you to the dealership, call or stop by the finance department at Pfeiffer Used. Our team will get you started on the process to financing your new car as quickly as possible.