How Does Car Financing Work?

Man and Woman Signing Contract
 

We know it can be a bit of a confusing process when trying to buy a new car, so we’ve put together a guide to help you better understand your options and what they mean. So does it mean to finance a car? And how does financing a car work? Take a look below to learn how car finance works and what it really means when you decide to finance a vehicle.

 

 

What Does it Mean to Finance a Car?

How car finance works is actually much simpler than a lot of Santa Cruz and Monterey drivers think. Financing a car involves borrowing money to purchase your desired vehicle and then repaying that loan over an agreed period of time. You’ll be paying back that loan in monthly installments.

Key Elements to Understand How Car Financing Works

  • Principal Amount: This is the initial amount you borrow, usually the price of the car minus any down payment or trade-in value.
  • Interest Rate: Represented as a percentage, an interest rate is the cost of borrowing money. Your credit score, loan term, and the lender’s terms will determine this rate.
  • Loan Term: This the amount of time you have to repay the loan. Common terms are 24, 36, 48, or 60 months.
  • Monthly Payments: You payments will be calculated based on the principal amount, interest rate, and loan term. This is the amount you’ll pay each month.

How Does Financing a Car Work with Santa Cruz Subaru?

  1. Choose Your Vehicle: Browse our vast selection in Capitola and choose the car that fits your Santa Cruz needs and desires.
  2. Discuss Your Options: Speak with our finance experts. They’ll guide you on the best financing solutions tailored to your situation.
  3. Apply for Financing: With our easy application process, you’ll receive a decision quickly.
  4. Drive Away: Once approved, finalize the paperwork, make your down payment (if any), and drive away in your new car!

How Does Financing a Car Work? Start at Santa Cruz Subaru! 

Now that you know how car financing works, you’re one step closer to making your new car dreams a reality! If you’re a Watsovnille driver looking to upgrade your Capitola ride, then get started by taking a look at our new vehicle inventory. Contact us to schedule a test drive!

 

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Santa Cruz Subaru 36.9816761, -121.9655413.