How Does Car Financing Work?

Man and Woman Signing Contract

Financing a car involves working with a series of lenders through a bank, or through our dealership, to secure an offer with interest rates and payments that suit your budget. We’re here to give you all the facts on how car finance works and show you what to do to get the best possible rate on your car. Turn to Lexus of Tampa Bay for premiere auto financing help!


What Is the Process of Financing a Car?

What does it mean to finance a car? As opposed to leasing a car, which is basically just a long-term rental, financing a car involves the act of borrowing money for an auto loan that will be paid back with interest, giving you full, free and clear ownership of the car at the end of the loan term.

When it comes to financing your loan, you can either work through a bank or a Tampa dealership that offers in-house financing. At Lexus of Tampa Bay, we work with a large network of lenders, so we can help you find the best interest rate and payments for your budget and needs. From there, you’ll select the offer that suits you best and begin the financing process. You can even apply for financing at home!


What Factors Into a Car Loan?

There are a few components of a car loan that you’ll want to familiarize yourself with:

  • Your down payment is the amount of money you put toward the car that reduces the amount of money you have to borrow.
  • Your credit score determines what your interest rate is going to be, with steady on time payments being the best way to build your credit.
  • The term of your loan is how many months it’s going to take to pay the loan off. The shorter your term, the less amount of interest you’ll be paying over the life but at the expense of higher monthly payments.
  • Your debt to income ratio will determine a safe level of funding for you to get to purchase that car.
  • The age of your car is also important because a newer car will last longer and will therefore have a lower interest rate.

If you’ve got credit that’s less than perfect, consider having someone cosign for your loan.

Tiny car with coins and finance paperwork

Find More Lexus Finance Tips at Lexus of Tampa Bay

Now that you better understand what goes into financing a car, start shopping for that new Lexus you’ve always wanted! Once you’ve found a model that suits your needs, we can start a conversation and get the car financing process rolling. Contact us to learn more today, or schedule an appointment at our Lexus dealership near Brandon!


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5852 North Dale Mabry Highway • Tampa, FL 33614

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Lexus of Tampa Bay 28.00003, -82.50534.