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Posts: 197
Registered: ‎04-01-2012
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How does Auto Finanacing Work??

I'm buying my first car, and this probably seems like a dumb question..but here goes:


How does auto financing work? I understand the finanacial part, I'm actually talking about the physical part: do I need to have picked out the exact car I want and have the purchase agreement before I go to get finanacing at my bank? If I'm using my trade in as the down payment, do I need to have my trade in offer as I go to the bank, or do I just estimate?


I really don't get it...I'm buying from a place an hour from my bank. Do I have to drive there, get trade-in/purchase price agreement, drive back to the bank, apply for the loan, then drive back to the dealership?? Can I get the loan BEFORE I go car shopping?

Starting Score: 583 (CreditKarma, 2009)
Current Score: 783 (Walmart Free FICO, March 20, 2012), 774 (Equifax, BoA Pull, 2/20/13)
Goal Score: 800+

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Regular Contributor
Posts: 171
Registered: ‎03-05-2012
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Re: How does Auto Finanacing Work??

I'm not expect. However go to your local credit union & get pre approved for auto loan. Then u have 30 days to get the car u like and / or go the dealership & haggle with them to get your APR lower & with better terms than your CU loan. I find doing this gives u A: idea of how much u can spend & what your monthly repayments & APR looks like & B: u have more power going into the Dealership & can tell them to go do one if they try to rip u off!

Always do LOTS of research. Have idea of the value of the car your buying - privately & trade value.

KNOW your Fico scores before u go. Some company's use enhanced Fico scores & others use FICO. So know what your scores are so the dealer or banker doesn't try to convince u that your scores are not good enough to get a better rate.

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