Automotive Financing 101
Your Ultimate Guide
Buying a new or pre-owned vehicle is a major investment. Because of this, many people choose to finance their vehicle. It doesn’t matter if you’ve owned or leased dozens of cars or if this is your first time, the process of financing a vehicle can feel overwhelming, but it doesn’t have to be.
With a basic understanding of your financing options and some background information on personal finance topics and budgeting, you should have everything you need to know to find the perfect car for you. We’re here to help guide you through the process and provide you with the answers you need along the way.
What is Auto Financing?
In short, auto financing is borrowing money to pay for a vehicle, whether it is a new car or a used car. You will usually do this through a bank or financial institution, but you can also finance through a dealership or automotive manufacturer. The choice is up to you.
Whether you finance your car or lease it, you will sign an agreement to pay a set amount of money each month which includes both the principal (the amount you borrowed) and interest (the cost of borrowing the money). You’ll pay that amount for an agreed-upon number of months (also known as the term). At the end of that time, the agreement is fulfilled, and all of the money has been paid that’s owed.
What Are Interest Rates?
What Are Loan Terms?
Auto Financing Special Offers and Incentives
Your Credit Score and How It Relates to Auto Financing
Your credit score is an important part of your financial life. It influences many things when you try to finance a vehicle, including the amount of money you can borrow for your next vehicle and what interest rate you’ll receive.
The Three Credit Bureaus
What Is a Good Credit Score?
Establishing and Managing Your Credit
Should You Buy or Lease a Car?
The biggest difference between buying and leasing is ownership. Buying a car means that the vehicle is yours to do with and drive for as long as you like. Leasing on the other hand is like renting in that the vehicle is not yours, is usually returned to the owner after all payments are made, and has to be kept in good condition.
Consider Buying if You:
Consider Leasing if You:
Preparing to Purchase or Lease
Head into the dealership with an idea of what you want. Smart shoppers take the time to prepare themselves before they head to the dealership. Taking time to prepare will help ensure you get the best deal possible.
Budgeting for Your New Car
Calculating Your Payment
Prequalification Can Help Streamline the Buying Process
Applying for Automotive Financing
What to Bring to the Dealership
What to Do at the Dealership
Owning and Paying for Your Financed Vehicle
Now that you own it, your financial journey enters a new phase. Your focus should be on driving and enjoying your vehicle while also making sure you make your necessary monthly payments.
Make Payments on Time
Keep Track of Your Financing End-Date
Frequently Asked Questions
Can I defer/extend a payment on my account?
What payment options are available?
I have paid off my vehicle. When will I get my title?
Where do I send my payoff check?
Where can I find my account number?
Ford Credit — NMLS #3018