Here Are 5 Important Steps In Car Financing


Car finance describes purchasing a vehicle by borrowing money from a financial institution or lender and making periodic payments until the balance is paid in full. Using financing to purchase your car can be an excellent way to get into a new car with manageable monthly payments and not too much upfront cash.

But before you race off to your nearest dealership, you should consider five important steps in acquiring auto finance for your new purchase.

1. Determine Your Auto Loan Budget

This is the amount of car payment you can realistically afford after the various costs of your car and the out-of-pocket expenses necessary to add extra value to your vehicle.

Your budget will include both the monthly payments and out-of-pocket expenses for modifying and improving your car’s performance. A 5% down payment is suggested, but a lower down payment can also be satisfactory and is often offered by dealerships as part of their financing or lease package.

2. Check Your Credit Report

Your credit report will greatly impact your ability to get auto loan approval and the best possible interest rate on your vehicle loan. Your credit score reflects your history of borrowing money and paying your bills. You can expect competitive rates and terms for a new car if you have good credit.

If you don’t have good credit, you’ll probably be stuck with higher interest rates and less favourable terms for the purchase. If possible, correct any poor reports before you start shopping for financing.

3. Apply For Auto Loan Preapproval

Each credit union, bank or auto dealer can provide you with a pre-approval letter that will permit you to get up to 60 days of free market interest on your financing. You can qualify for the car loan if you demonstrate that you can afford a payment of at least the amount of money agreed upon, plus a reasonable downpayment.

If you don’t respond within those 60 days to the lender’s pre-approval letter, then all bets are off – your financing may not be available and little, or no other lender will offer fair terms. So be sure to respond promptly!

4. Shop For Your Car

Research the car you want and determine the dealer’s suggested retail price (MSRP). This is the most the dealer will pay for the vehicle at wholesale.

Next, determine what kind of rebates or dealer incentives are available from your preferred dealership. The rebate will be deducted from the MSRP and taken off your final price. If you can get $1,000 off a $20,000 MSRP car, that’s a 10% reduction in price…you want to negotiate for this!

It would be best if you also determined what other rebates are available on new cars. For example, many states offer tax credits and cash rebates for purchasing certain clean-burning cars like hybrid electric vehicles.

Since rebates, credits and cash incentives for new cars can be significant, you might want to contact your state government to see if the purchase of a hybrid will save you enough money that it makes it worthwhile for you to make the switch.

5. Finalize The Auto Loan

Once you have reviewed your credit report, determine your budget and compared rebates and incentives, find a dealer you are comfortable with. Ask those responsible for the team at the dealership to arrange an appointment with the finance manager to discuss your financing options.

Ensure that you know how long it will take for the dealership to deliver on certifying your loan and delivering the car to your doorstep. Also, understand if any additional fees may be due to financing from a particular lender or bank. Suppose you are unsure about your ability to qualify for a car loan and how this will impact your current financial situation. In that case, you might wish to consult an independent financial advisor.


The above steps are only a few pieces of information you should consider before finalizing a car loan agreement with a lender or dealer. Auto Car Loans, Brisbane, is a financial services company that can assist you in your car finance needs. At Auto Car Loans, we strive to give our customers an experience that is friendly, informative, and thoroughly professional

By: Raymond James

About the Author:

Ray is a sought after thought leader and an expert in financial and money management. He has been published and featured in over 50 leading sites and aims to contribute articles to help novice financial planners. One of his goals is to impart his knowledge in finance to educate and help ordinary people create and achieve their financial goals.

Ethan More
Hello , I am college Student and part time blogger . I think blogging and social media is good away to take Knowledge


    Leave a reply

    Your email address will not be published. Required fields are marked *