How Does Car Financing Work?

Dealership Finance Professional signing documents
 

What does it mean to finance a car? When you’re looking for a new or used Hyundai vehicle, it pays to have a better understanding of how car finance works. Our dedicated finance center is here to help you better understand your options when looking for your next Hyundai near Milledgeville. Learn more with us below about car financing before your next visit to Five Star Hyundai of Macon.

 

 

How Does Financing a Car Work?

Before applying for a car loan, it’s best to have an understanding of your credit score. Your credit score will generally be a larger factor when it comes to the kinds of loan terms you’ll be offered by lenders. Lenders include banks, credit unions, and dealerships like Five Star Hyundai of Macon. Applying for a car loan with high credit will give you more favorable loan options with lower interest rates on those loan offers. Lower credit scores limit your loan options and usually mean higher interest rates. Here are the factors that lenders wil consider when detemring your loan offer:

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

If you have a low credit score, your options will likely be more limited. It may also not be the best time to get a vehicle if your credit is low enough. But for many drivers, they need a vehicle. So, if you find yourself needing a vehicle on bad credit, it’s best to go with a vehicle that you can realistically afford with a loan term that will be more manageable for you each month. If you consistently pay each monthly payment over time, you should see an increase in your credit score.

Choose Your Lender Carefully & Time Your Time

It’s generally recommended to apply to a handful of loan providers within 14 days once you determine that you have good enough credit. We recommend those 14 days and a handful of lenders so that you have a good number of options to choose from, and that 14-day window will ensure that your credit isn’t as affected. Your credit will take a temporary hit when you apply for a car loan, and applying to a handful within a certain time frame ensures that most of them will fall off of your credit score in about two years or so. Most loan offers last for 30 days or so, so applying all at once gives you plenty of time to consider each loan offer.

Finalize the Loan Terms Before Moving Forward

You’re usually able to negotiate the price before finalizing your loan term. You’ll be able to have a back-and-forth with your salesperson before pulling the trigger. Once you come to a mutual agreement, you’ll finalize the paperwork and everything involved in securing your new vehicle.

Learn More About How Car Finance Works at Five Star Hyundai of Macon

How does financing a car work? Contact us online or call us at 478-345-8927 to learn more about your financing options at Five Star Hyundai of Macon. We’ll offer plenty of car-buying tips and go over what’s involved when you’re looking for a new car loan near Byron!

 

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