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Down Payments

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How to Finance a New Auto

Before you apply to finance a new auto, learn more about the process here. We’ll explain the basic steps of financing your new vehicle.

  1. Getting started.  Before you finance a new auto, you need to start with a budget.  Think about how much car you can afford, and set limits before you pursue financing or begin car shopping.  Experts recommend that no more than 20% of your net income go toward car payments on all of the cars you own.  Next, as with any major loan, you’ll need to check your credit before you finance a new auto.  Review your credit report for errors and dispute any erroneous items.  Finally, you’ll need to narrow down the type of car you’re looking for so you have a general price range with which to work.
  2.  Take care of financing first.  Most people make the mistake of waiting to finance a new auto after they’ve found their new car.  Ideally, you should finance a new auto with pre-approval before you even begin car shopping.  This will put you in a better position as a buyer and will allow you the freedom to focus on finding a great car at a great price.  You will also avoid the massive pitfall of trying to finance a new auto at the dealership, which can rarely offer the best deal.  When you finance a new auto online, you reap the benefits of a competitive marketplace, whereas dealerships basically enjoy a monopoly. 
  3. Find your new car.  Once you finance a new auto, it’s time to find the right car for you.  Make sure you’ve taken some time to decide whether you want a new or used car.  You can finance a new auto or a used auto on our site, but the rates for used car loans are usually less competitive.  On the other hand, new cars cost more.  In addition, consider the costs to insure your prospective vehicle.  With gas prices forever on the rise, you might also factor in fuel economy to better gauge your total cost of owning the vehicle.
  4. Buying your car.  When you finance a new auto online, you will usually be able to walk into the dealership with a check for the price of your new car.  If you were pre-approved to finance a new auto for more than your car will actually cost, don’t worry—you will only be responsible for repaying the actual price of the vehicle.  Before you pay for the car, however, you will have to haggle with the dealer over price.  Keep in mind that having pre-arranged financing makes you an infinitely more attractive candidate, so you have more leverage than most customers.  Having your financing squared away lets you focus your attention, and the dealer’s, on the price of the car.  If you finance a new auto with us, you have the upper hand in negotiations because dealers enjoy certain benefits when buyers pay in cash.
  5. Insure your vehicle.  You might want to do this step after you finance a new auto because, by law, your car will need to be insured when you drive it off the lot.  The Internet is a great place to get competitive quotes on car insurance policies, so shop around.  Make sure you have enough coverage to keep you from financial ruin if you were in an accident.

There are 8 questions you must know while applying for a car loan.

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Be the to know

  • If you make a sizeable down payment when you finance a new auto, you will benefit greatly.
  • The recommendation is a down payment 20%, though the average car buyer puts down only 5%.
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