How Are Cars Financed


There are two ways to pay for a car when you buy it from a dealership. You can pay for it outright or you can pay for it in installments. When you pay for it outright that’s often called paying “in cash” even though you don’t have to pay in cash. If you want to pay in installments, you can have it financed, get a third-party loan, or lease-to-own. Having a car financed is one of the most common ways to pay for a car. Typically, financing a vehicle refers to options presented from the dealer who sells you the vehicle. This option is convenient because it streamlines the process.

Financing Your Car

When you decide to buy a new or used vehicle, you need to figure out how much money you can spend. You should figure out how much you can spend per month and how much you can spend in total. If you’re going to choose car finance in Auckland, you need to figure out how much you can spend each month and how long you would like to take to pay it off. There are a range of options available for different vehicles. Some people want to have their vehicle financed for as short a time as possible. Typically, six months to one year is considered short-term financing. Others may prefer to buy an expensive car but pay for it at a lower rate. These people will choose a longer financing period.

When you’ve figured out about how much money you can spend, you will then go to the dealership and look through a range of different options. When you pick out a car, you can ask the dealership about financing. If you get a third-party loan from a bank or other lender, it will add another step to the process and possibly complicate the process. Financing with the dealership from which you buy the car is the simplest option. They also tend to be more flexible because they have a higher incentive to sell the vehicle.

Added Flexibility

Because the dealership owns the vehicle and wants to move as many vehicles as possible you have greater flexibility when buying a car through a dealership. For example, they will offer bad credit financing and zero money down financing, also known as zero deposit financing. Zero deposit financing means that you can get the vehicle and establish a repayment plan without having to actually spend any money upfront. These are rare plans. They generally come with higher monthly rates but they are very useful if you don’t have the money at the moment.

Bad credit financing is a financing option for someone who a bank or other lender might deem to be untrustworthy. A bad credit loan is great for someone who doesn’t have great credit because you get a car as well as an opportunity to begin rebuilding your credit.

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