Car buyers usually focus most of their energy on finding a perfect car and only consider car finance at the end of the journey. Although it is important to buy the right car, figuring out how to pay and get car finance is also a key part of the car buying process.

Here are some steps to take when buying a new or used car:

Learn the language of borrowing money

Before you start your car finance adventure, you need to know some basic terms.

Calculating the monthly payment of the loan requires relatively complex mathematical calculations because as the loan balance decreases, the monthly interest you pay will also decrease. Fortunately, you can find it quickly by inserting some numbers into our car payment calculator.


When comparing car loans, the most important thing is to look at the cost of the car plus the total interest cost. Focusing on monthly repayment, the number of months you will pay, or the interest rate alone can't give you a complete concept of the total cost of the car.

Understand your credit score

Your credit score is a snapshot of your credit and your ability to repay a car loan (or any other type of loan or credit card). It basically boils down to a three-digit score from your credit report information. A higher number indicates that the borrower is likely to repay the loan, while a lower number indicates that the loan is more likely to default.

Find a good financing transaction

The interest rates charged by different lenders depend on market demand, your reputation, the value of your loan amount relative to the car (loan to value ratio), and their risk appetite. With a little research, it is easy to find generous promotions with competitive prices and preferential terms.

Where can you get a car loan?

Just as you should buy a car from several dealers, you should also buy a car from several loan institutions to find the best deal. Car buyers have never had so many loan options or so easy access to interest rate information. In addition to obtaining loans from the financing departments of many automobile manufacturers, you can also obtain automobile financing from large national banks, small community banks, credit cooperatives, financial companies, and online banks.

Apply for an auto loan in the right way

You should apply to several banks for a car loan. This will take some time and you will have to provide your personal information to some lending institutions. As long as you submit multiple applications in a short time to avoid damaging your credit score, there is nothing wrong with submitting multiple applications. If you spread your application for several months, each application will reduce your credit score by several points. Completed in a short time, the credit reporting agency will see that multiple applications are just one query.

Although you may not need to use a quote, you must have a quote ready before you visit the dealer. You may want to do this about a week before visiting the dealer so that you have a pre-approved deal in your pocket before you actively start buying a car. If you have the right time, any inquiry between them and the credit bureau will not affect your credit score. If you don't have a pre-approved financing plan, dealers will have nothing to try to beat, and you will be forced to solve any car financing agreement they provide. If you have a pre-approved place, you won't feel pressure to accept the transaction, which is bad for your wallet.

Carefully check the financing quotation of dealers

When you've studied what used car or new car financing is available and you already have a pre-approved deal on hand, it's time to enter the interesting part: buying a car. Knowing that you have an affordable financing plan will help ease the pressure in the process and let you focus on negotiating a good price and fair deal for your new car.

Generally speaking, car salespeople want to bundle the three elements of buying a car - price, replacement value, and financing - into a beautiful and tidy bag. On the other hand, you want to treat each component as a separate transaction. You can do this in several different ways.

Complete the transaction

Once you and the seller have reached a mutually acceptable agreement, it's time to sign the agreement. You must read all documentation to ensure that it complies with the terms you agree and does not include any expensive add ons or any spaces. If there is an error or blank, please insist on correcting or filling in before signing. If the financial officer says they want you to sign, they will deal with it later, politely refuse, and explain that you will only sign when they are right.