How Does Car Financing Work?

Choosing to upgrade your current vehicle is a big financial decision to make and it's important to understand the different ways that shoppers can pay for their car, truck or SUV. In some cases, the process can be stressful, but La Porte area drivers have the full support of our Finance Department to guide them smoothly through the entire process.

Financing a Car 

Drivers often ask the question, "What is financing a car?" The simple answer is that the financing process involves applying for a loan, from either a dealership or a financial institution such as a bank. There are important criteria that lenders will review when determining your loan eligibility, length of agreement and interest rate:

  • Amount of Loan
  • Year of Vehicle
  • Debt-to-Income Ratio
  • Credit Rating
  • Loan Repayment Period

How to Apply For a Vehicle Loan

Before you apply for a vehicle loan, Houston area drivers typically decide whether it is financially more affordable to lease or buy the car in question. Once that's been determined, the next step is to calculate how much you can afford to spend on your new purchase. Use the tips below to help build your plan to find a lender who can offer the best financing deal:

  • When your credit rating is low, a larger initial down-payment can help reduce the monthly payments significantly. Determine how much you can afford to put down before applying for the loan. Remember to include the cost of insurance, fuel, and repairs in your calculations.
  • Decide what you want to do with your current vehicle. Trading it in or selling it outright is another way to reduce the amount of the loan.
  • Search for the car, truck, or SUV in our online inventory that fits your lifestyle and driving needs best, and then establish the cost of the exact model you are intending to buy. Then head over to our convenient online payment calculator to plug in the figures and determine the monthly payments. Compare those numbers to your calculations.

Finance a Car at Bayway CDJR!

Let's assume you have found the perfect vehicle that you'd like to buy and you've established that the monthly payments fall within your budget. We now suggest applying for the loan online and then calling us for the all-important test drive. If you have any questions about leasing vs. financing, if you can trade in a financed car, or what coverage options are available for your car, such as gap insurance, feel free to contact us before driving home to League City in your dream car!

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