When shopping for a car, most people do not have the savings to pay for a vehicle with cash. The way it works for most car buyers is that they take out an auto loan to finance the purchase of their new vehicle. It can take several months of saving up and working to build your credit score in order to qualify for a decent rate on a loan. The balance of the car’s price is then paid in monthly installments, usually for five years. While this is the most traditional way to finance a car, it is by no means the only way.
When you purchase a car from a dealership – no matter if it’s new or used – you have a few financing options at your disposal. The dealership will offer you assistance in arranging an auto loan through a preferred lending partner, often in connection with the manufacturer of the car you’re purchasing.