What Is Financing?

Financing involves creating a contract with the dealership regarding a vehicle you want to purchase from them. This contract tells you how much you need to pay each month and for how long.


So why would you choose to finance your next car instead of pulling out a loan from the bank? Car Financing straight from the dealership is usually easier since they already have the assets needed to complete a transaction, and getting approved is much faster than applying at a bank or other lender. You’re more likely to walk into a dealership and leave with a car the same day than to get the loan you need from a bank just as fast.

Another benefit of financing with a dealership is that you may catch yourself a good deal if you pick the right time. Usually around the holidays or the beginning of the season, businesses will offer a sale or deal on certain cars. The lower the car’s estimated value, the lower your payments will be.


Every buyer’s contract will look a bit different as there are many factors to consider when determining conditions. The dealership will look at your credit history, the value of the car you’re interested in buying, the time span of the contract, and the annual percentage rate (APR) when calculating the amount of your monthly payments.

The easiest way to bring down the amount of your monthly bill is to make a down payment up front. It could be as little as $200 to as much as $7,000 and you’ll immediately notice the difference. A down payment is not always required, but the more you put down the lower your monthly payment will be. Some dealerships will even accept your old vehicle as a down payment in case you don’t have cash. Learn the importance of having a down payment.


Even if you snag the best deal on a car, you need to make sure it fits your budget without hurting your financial situation. Think about how much you earn in relation to how much you spend each month to determine if you can comfortably make payments on the vehicle without getting yourself into a tight situation. It’s very important to not miss a single car payment because skipping a payment will severely hurt your credit and your car can default, meaning that it can be repossessed.

Credit affects your eligibility when qualifying for a loan or finance, but most dealerships are willing to work with you no matter what your history looks like. Typically, anyone looking to buy a vehicle with a poor or nonexistent credit score will be required to have a cosigner. The person you select to be your cosigner will accept equal responsibility for the vehicle’s payments. Discover other factors that can influence your financing options.

As you can see, there is a lot that goes into Car Financing but there are many benefits that come along with it. The sales people at Prieto Automotive are trained to work with your budget so it’s worth it to meet with us to discuss what will work best for you. You can call any of our stores and we’ll gladly help you find your next vehicle.

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