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How Does Financing a Car Work?

Man and Woman Signing Contract

What does it mean to finance a car? Well, when you decide to purchase a new or used car in Delray Beach, you can either purchase it outright, lease it, or finance it. Simply put, to finance a car means to use a loan to purchase a car so that you can pay it off in regular installments. Learn how car finance works from the finance team here at Lexus of Palm Beach below.

How Car Finance Works

Now you know the answer to “what does it mean to finance a car?”, but how does financing a car work? The process for how car finance works generally plays out like this:

  1. You choose a used or new vehicle at the dealership
  2. You apply for a loan through either the dealership, a bank, or a credit union (our application can be started online).
  3. The lender will check a few factors including: your credit score, the loan amount, the length of loan, your debt-to-income ratio, and the age of the vehicle.
  4. Then they will decide whether or not to approve you for a loan and produce a contract for paying it off.
  5. Then, you can negotiate the contract and decide whether or not to sign the contract.
  6. Once you sign the contract, all you have to do is pay off the loan.

Having a low credit score or weak credit history may make it difficult to get a good loan. It could be good to consider asking a family member or close friend in Lake Worth to cosign your loan.

Woman shaking mans hand over a car contract clipboard with car keys

Decide on Your Lender

It’s good to apply for loans at multiple places so that you have a few different options to choose from. A dealership that offers in-house financing may give a different offer from a bank or a credit union. Choose the loan that makes the most sense for your budget and your needs, whether that be how much money you can put down, or how much of a monthly payment you can afford.

Finalize the Loan Terms

Once you decide on a loan option, you can still negotiate on price. You and the salesperson can go back and forth until you settle on a loan with an interest rate that works for you. Once you’ve settled, you can finalize the loan terms to seal the deal. That’s when you’ll sign the necessary paperwork and be able to drive the vehicle home to the Palm Beach Gardens area.

Learn More About Car Finance at Lexus of Palm Beach

If you have deeper questions about the subject of how car financing works, feel free to contact us online or stop by our dealership in West Palm Beach. We’re happy to help you sort through any questions and get you into a new Lexus today!

New Lexus Cars for Sale in West Palm Beach

Lexus of Palm Beach 26.7082964, -80.1578433.