If you have decided that you would like to make a new car purchase it is likely that you will soon find yourself sitting in a finance office of a car dealership. One of the things that are just assumed when buying a new car is that there will be some financing needed but you weren’t expecting to be handed options.

The finance officer wants to know if you plan to get your loan from the dealership or if you have made alternative arrangements with a bank. Getting a loan from the dealership is often more convenient however, you will likely pay more if you finance through them. This amount will depend on what your credit looks like. You can often get a car loan through the dealership even if your credit is bad but you will get some hefty rate hikes this way.

Be prepared when you go in for your new auto to either pay cash for the car, lease it or to buy it with a loan. Each dealership has at least one lending institution that they deal with. If you decide to buy your car and need a loan then they will have you fill out a credit application. The cost of the car along with license fees, title and sales tax will all be combined into the loan amount. Auto financing is usually available from three to six year pay off periods. Obviously, the longer the loan is the less your payments will be but the more you will pay in interest too.

It is always helpful if you do put a nice down payment at the time of purchase. During the time that the loan is open, or unpaid, the lender will be the first secured party on the title with you following underneath. It won’t be until you make the final payment on the loan that the car will actually be yours.

If you decide to lease your car then you will still need to complete a credit application but the dealership will shop around for a bank for you to lease through. Then you decide how long you want your lease to be, three years is pretty standard. As far as down payments are concerned, many times you can drive away after paying only the drive off fees. Your last option is to pay cash. This makes for a very straightforward transaction and the dealership can’t disguise the price of the car.

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Chimezirim Odimba is a finance expert.

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