How Does Financing a Car Work?

Purchasing a new car is a big milestone, and if you’re not sure where to start, moving forward with your dreams can seem almost impossible. For many drivers near Tysons Corner, the question “How does financing a car work?” looms large. Thankfully, the Lindsay Volkswagen of Dulles finance team is here to help. Whether you choose to buy new or buy used, you’ll have a much better experience when you understand the details of the car financing process.

What Is Financing a Car?

Let’s start with the basics: What does it mean to finance a car, anyway? When you finance a vehicle purchase, you’re going to be applying for a loan, determining a plan to pay it back, and working over time until you’re the full owner of the car, truck, or SUV.

Drivers who want to upgrade their rides around Springfield and Alexandria have two basic options: Financing and leasing. If you’re not interested in full ownership, you’ll want to find out how to lease a car in Sterling. However, if you’d prefer to drive without mileage limits, modify your vehicle, or keep it for more than a few years, we think you’ll prefer financing.

How Does Financing a Car Work: A Quick Step-by-Step Guide

Now that you’ve answered the question, “What is financing a car?” we’re going to take you through all of the steps in the car financing process:

1. Figure out how much you can put down.
2. Apply for a loan to cover the gap between your down payment and the asking price.
3. Compare offers and get the monthly payment that works for you.
4. Finalize your loan terms and add options with an expert.

Now, it’s time to take an in-depth look at how car finance works.

How Car Finance Works: Applying for a Loan

The first step involves figuring out how much car you can afford, and what sort of monthly payments you can afford to make. Don’t forget: Making a bigger down payment or valuing a trade-in can help to reduce the amount you need to borrow.

Now that you’ve figured out how much money you need, you’ll want to apply for financing. Although many dealerships offer in-house car financing, and applying here will allow you to connect to Volkswagen Credit, you can also apply for a loan with a trusted bank or credit union. No matter where you go, the lender is going to look at these factors:

• Your credit score
• The amount you’re borrowing
• Your debt-to-income ratio
• Your loan term
• Your chosen vehicle’s age and condition

How Car Finance Works: Choose an Offer and Finalize Your Terms

If you’re going to apply for financing from multiple sources, remember to make all of your applications within a 14-day period. This will eliminate any chance of negative credit reporting. If you receive multiple lending offers in return, you’ll want to compare the interest rates and loan terms with each package. A longer loan term will result in a lower monthly payment, but you’ll spend more money in interest over time.

In some cases, there may be room for negotiation on the purchase price or terms. A lender might be convinced to give you a better package if it means you’ll choose their service over a competitor’s. Once you’ve chosen the superior loan, you’ll sit down with an expert to work out the final terms, and decide on additional packages and options like GAP insurance. Then, you’ll drive home to Dulles or Ashburn in your new or new-to-you vehicle!

The Car Financing Process Is Easier with Lindsay Volkswagen of Dulles!

Ready to get started? We’ve made it easy to apply for financing online, and you can use our monthly car payment calculator to compare offers. Still have questions? Check out some of our car buying tips and tricks or drive into Lindsay Volkswagen of Dulles today.