Financing is a loosely used term in the car business. It is used with a means that the dealership will either provide the loan to take lease the car or to buy the car. Buying the car with single cash payment would be the opposite of financing a car.
You can also get the loan from a bank to finance your car at the dealership where you are buying. You can just go to a dealership, choose your desired car, fill the credit application and come out in a new car. You can do this at your convenient time even out of bank working hours.
- To buy: If you want to get the finance with the help of dealership while you are buying the car, you have to fill a credit application. As per your credit scores, The leadership lending institution provides the auto loan based on the credit score. The amount will be based on the negotiated price, sales tax, title fee, licensing fee and other related expenses. Most auto manufacturers have their own companies to lend for the auto loans. To pay off the loan usually three to five years of time will be given. There are custom time ranges also provided by the lending institutions based on your comfort. The longer the period the lower the periodical payment, but overall amount will be higher. As long as you are paying off loan, your title is with the lending company. Once you paid your final settlement you can get the title and you are the owner of the vehicle.
- To lease: You will be asked to fill a credit card application when you go for a lease finance option. The dealer will shop a lease for you based on the length of the lease and your credit score. Many banks will be contacted and each one has their own terms and conditions. You need to decide the amount to pay upfront and the lease duration. Most of the lease contracts will allow to drive for 12,000 miles per year. If you drive more than this, ask for 15,000 miles or some more. Due to this monthly payments will raise but you will save in long run. At the end of the lease period, you get an option to buy the car or to return. If you want to buy, they will charge you by deducting the residual value. If you want to return the car, they will charge you for the excessive wear and tear, in case of the car is in good condition they will refund your security deposit.
You can get a competitive interest rate when you have good credit. Based on your credit rating, you are eligible for some special schemes or programs those can lower your cost. If there is no credit or bad credit for you, the dealer might charge a higher interest rate.