How Does Car Financing Work?

Whether you’re in the market for a new vehicle or a used one, you’ll have the option of purchasing it outright, leasing it, or seeking financing. But exactly what does it mean to finance a car? How does financing a car work? The Mercedes-Benz of Warwick finance center answers these questions and more below to help you find the right vehicle for your Providence and East Greenwich drives, as well as your budget.

What Does It Mean to Finance a Car?

So, what does it mean to finance a car? It simply means that you take out a loan to pay for the vehicle, and then repay the loan in monthly installments over a certain number of months. In addition to the financed amount, you are also charged interest, which is typically based on your credit score; this amount is factored into your monthly payments.

How Car Finance Works

At Mercedes-Benz of Warwick, we make it easy to finance your next vehicle. The first thing to do is to apply for financing, which you can do online or at our Warwick dealership. Lenders will consider various factors when determining your pre-approval amount and interest rate, including:

• Credit Score
• Debt-to-Income Ratio
• Loan Amount
• Loan Length
• Vehicle Age

After securing pre-approval, you’re ready for the next steps in the process. Here’s how car finance works once you’ve been approved:

Choose a Lender

You will be offered a loan through a lending institution or through the dealership itself. Be sure to consider how much you can comfortably afford to spend each month, and, if possible, you may want to put down a larger down payment to reduce the overall amount to be financed. Choose the lender that best fits with your financial needs and goals.

Finalize the Loan Terms

Once you’ve negotiated the sale price of the vehicle and arrived at mutually agreeable terms, you’re ready to finalize the deal. This involves completing, signing, and submitting the required paperwork and getting the keys to your vehicle. Now you’re all set to hit the roads of Cranston and beyond in your newly-financed ride!

Discover More About How Car Finance Works at Mercedes-Benz of Warwick

How does financing a car work? Now that you can answer that question, it’s time to start shopping for your next vehicle. Browse our latest inventory online, and feel free to contact us if you have any questions or would like more information. Our team is here to demystify the car financing process and ensure you drive off our lot with the ideal vehicle for your financial situation.