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How Does Car Financing Work?

man and woman with car salesman

At Eich Mazda, we get asked all the time by Sartell drivers, “How does car financing work?” It’s a fair question. If you’ve never bought a car you might not know how car financing works. Our finance department is here to help you understand ‘what is car financing.’

What Does it Mean to Finance a Car?

If you’re wondering, what does it mean to finance a car, it means that you’re borrowing the money to pay for your car from a bank or other lending service. You’ll make payments plus interest to the lender. You won’t own your car outright until you’ve completed the payment plan. The lender will consider the following information when giving you an auto loan:

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

How Does Car Financing Work in Three Steps

For new car buyers in Sauk Rapids, we will answer, how does car financing work, in three steps. Here are a few things to consider:

  • How much can you put down before you apply for a loan? If you plan to trade in another car, include that in your down payment.
  • Include the cost of gas, insurance, and maintenance when you’re making your calculations. Use our payment calculator to see what you can afford.
  • If you apply for financing at multiple locations, make sure to submit all of your applications within 14 days of each other.

How Car Finance Works: Apply for Financing

You can apply at banks, or apply for car financing online with Eich Mazda. Our finance department will shop for loan rates for you and other Saint Joseph drivers.

How Car Finance Works: Choose Your Lender

You’ll want to choose a lender whose terms fit your budget, which includes the interest rate. The interest rate that the bank or dealership requires depends on your credit score. See below for reference:

  • Credit score over 750: 4.24%
  • Credit score 700-749: 4.49%a
  • Credit score 650-699: 7.92%

How Car Finance Works: Finalize the Loan

You can negotiate the final price of your car after loan approval. Be prepared to negotiate with the lender, too. You never know how car finance works with a given lender until you ask

How Does Car Financing Work? Ask Eich Mazda’s Financing Department!

Whether you’re buying your first car or your fifth, the finance department at Eich Mazda is here to give you car buying tips to make the experience as stress-free as possible. Contact us anytime with your questions about how car finance works or compare buying vs. leasing

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Eich Mazda 45.5544619, -94.1806881.