Car financing allows you to pay off the purchase price of a vehicle over a period of time, typically in monthly installments. The period of financing time can vary but usually lasts several years. The main benefit of financing a vehicle purchase is that it allows you to buy a vehicle without paying the total purchase price upfront. In most instances, you will need to make a down payment, but dealers and car-financing companies sometimes make special offers that do not require a down payment.
Car financing is available for both new-car and used-car purchases. A loan on a used car will usually have a higher interest rate than a loan on a new car. Several sources are available for car financing loans, including retail banks, credit unions, and auto manufacturer financing arms. If you are a homeowner, you may also be able to obtain a home equity loan to purchase a vehicle.
When buying a new or used car, it’s smart to shop around for the best financing offer you can find before heading to the dealer. Having pre-approved financing in hand can make the car-shopping experience faster and easier.
