How Does Car Financing Work?

finance dealership

It isn’t hard to fall in love with the 2021 Jaguar F-PACE interior. Whether you’re searching for leading technology features, impressive creature comforts, or generous interior capacities, you’re going to appreciate everything that this five-passenger Jaguar SUV has to offer. 

What does it mean to finance a car, and what is financing a car going to cost you in the long term? Financing is just one way of saying “taking out a loan, taking possession of the vehicle, and paying back the cost over time”. So, how does financing a car work in real life? We’ll cover all the steps below:

  1. Making your application
  2. Choosing the right lender
  3. Finalizing the loan terms

What Does it Mean to Finance a Car?

If you’re wondering about how car financing works, it’s important to clarify one thing right away! You should know that while leasing is technically a special type of financing, most drivers use the word financing to refer to purchases, rather than rentals. Even so, the main difference between buying and leasing is that, with leasing, you’re only financing a small portion of the vehicle’s full value.

When someone asks you if you’re going to finance the car, they’re most likely asking if you intend to take out a loan or pay cash for your purchase.

How Car Finance Works: Making Your Application

So, let’s say that you’ve already found the perfect new or new-to-you vehicle, and you’ve decided that you’re not going to pay cash for your purchase. While you might also want to ask a few questions, trade in your current vehicle, or explore special offers, the next real step on your journey is the loan application.

You can apply for a loan at a bank or a credit union, but for many drivers, it’s easiest to apply for a loan through the dealership. After deducting the cost of your down payment and your trade-in vehicle’s value, find out how much you’ll need to borrow and how quickly you can pay it off. When you apply, any lender will look at each of the following factors:

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

Finding a cosigner is often the best option for drivers with less-than-ideal credit. You should also be prepared to show proof of income or proof of employment before your loan is approved.

How Car Finance Works: Choosing a Lender

Dealerships like Jaguar Paramus are connected to multiple lenders throughout the Englewood and Saddle River communities, so you might receive more than one offer after making your application. In these cases, you’ll want to consider all the details–especially the interest rate. 

How Car Finance Works: Finalizing the Loan Terms

It might seem counterintuitive, but the time after you’ve received approval is actually the best time to negotiate on price. Even if you don’t plan on negotiating, this is your chance to consider options and add-ons like GAP insurance or pre-paid maintenance plans. 

A representative from the dealership will help you go over all your options, and when you drive with Jaguar Paramus, you can take advantage of our Preferred Purchase® services to take care of pretty much everything online.

Our Financing Experts are Here to Help!

If you’re thinking about starting your next adventure at Jaguar Paramus, don’t wait to explore our current financing and leasing incentives. Our financing experts have experience assisting drivers from all over the Paramus and Ridgewood areas, and we’re prepared to do the same for you!

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405 NJ-17, Paramus, NJ, 07652

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Dealership Info

Phone Numbers:Service Hours:
  • Mon - Fri7:30 AM - 6:00 PM
  • Sat8:00 AM - 4:00 PM
  • SunClosed
Parts Hours:
  • Mon - Fri7:30 AM - 5:00 PM
  • Sat - SunClosed
Sales Hours:
  • Mon - Thu9:00 AM - 7:00 PM
  • Fri - Sat9:00 AM - 6:00 PM
  • SunClosed
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(844)336-0190

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405 NJ-17 • Paramus, NJ 07652

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Today's Hours:

Open Today! Sales: 9am-7pm

Open Today! Service: 7:30am-6pm

Open Today! Parts: 7:30am-5pm

Jaguar Paramus 40.9489573, -74.0731194.