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Gerald Kia of Naperville

How Does Financing a Car Work?

Saleswoman with car and clipboard
 

If you’re looking for a new vehicle, then you’re likely wondering, “how does financing a car work?” When you finance a car, you take out a loan for your car and then pay it off in affordable monthly installments. Auto loan terms for both new and used cars average about 72 months. Because every car buyer’s lifestyle and financial situation is unique, there are many ways to customize your financing plan. For example, bad credit financing is available for many Oswego drivers who choose to finance directly with a dealership. 

Read on for our car-buying tips about how car finance works in different situations so you can prepare for your car buying experience.


What Does it Mean to Finance a Car?

What is financing a car going to entail, and what can you expect from the process? Your loan eligibility hinges on several factors. Lenders will determine whether or not to offer you a loan by looking at factors like:

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

Finding a Financing Plan that Works for Your Budget

What is financing a car when compared with leasing? Financing payments are typically higher than lease payments and result in ownership at the end of the loan term. Lease payments are lower, and you’ll return the vehicle to the dealership at the end of the loan term.

Before you apply for financing and search for a lender, be sure to calculate your budget and monthly payments. A few more points to keep in mind include:

  • Bad-credit financing. If you have low or bad credit, a large down payment can help convince lenders to offer you a lower interest rate.
  • Trade-in value. You can apply the value of your current vehicle towards your next Kia model. Value your trade-in at our finance center today!
  • Make a budget. Include fuel, insurance, and maintenance costs, and determine your highest reasonable monthly payment — that’s because late payments can damage your credit.
  • Submit financing applications. To prevent damage to your credit score, submit all applications within two weeks if you apply for financing with multiple lenders.

Explore Your Auto Financing Options in Naperville

Ready to take the next step toward a new Kia Soul or Sportage, but you’re still left wondering, “how does financing a car work?” At Gerald Kia of Naperville, our goal is to find you Kia financing or auto loan financing that works with your budget. If concerns about your credit score or monthly payments are holding you back, contact our finance center to speak with an expert about flexible auto loan financing options and new vehicle specials for Oswego and Plainfield drivers!

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1661 Aurora Ave • Naperville, IL 60540

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Gerald Kia of Naperville 41.7652472, -88.1900288.