A Quick Guide for Automotive Financing: What You Need to Know

You’ve found the perfect car. It’s the Honda SUV that you want with all the features and equipment, and it’s sitting on the Honda dealership lot, ready to go.

But what now? How do you pay for it? This is where Honda Financial Services comes in. Since most car buyers don’t have the money to purchase a new vehicle outright, you’ll need a loan to purchase a new car or enter into a lease agreement.

Loans vs Leasing

One of the decisions you have to make when getting a new car is whether you want to borrow the money to purchase it or lease it. While both options allow you to drive away in a new car, they work very differently. When you purchase a car, you borrow the amount needed to pay for the entire cost of the car and make payments until the entire loan is paid off. When it is paid off, you own the car.

A lease is a short-term contract in which you pay a monthly amount to use a vehicle. Lease agreements usually last two to three years, after which the car is returned to the dealership. When a lease agreement ends, there is often an option to purchase it if you want to keep it, or you can enter into a new lease agreement for a new vehicle.

How Does Financing Work?

Most auto loans are secured loans, which means the car that you’re financing is used as collateral. This means that if the payments are not made, the lender has the right to take the vehicle back. Most auto loans range from 12 months to 84 months, but it’s important to consider the length of a loan carefully. Longer-term loans might seem appealing because the monthly payments are lower, but over the life of the loan, you’ll end up paying much more in interest.

Where Can I Get an Auto Loan

Auto loans can come from a variety of sources. If you go to a dealership, such as a Honda dealer, you can get a loan directly from Honda Financial Services. These Honda auto loans come directly from the manufacturer and can be used for a new Honda or a certified pre-owned vehicle.

If you don’t go directly through the dealership, you can also find auto loans through lenders such as banks, credit unions, and online auto lenders. Before making a final decision on a loan, make sure to consider all the terms and conditions, the interest rates, and fees.

Auto Manufacturer Financing Benefits

If you want to find the best deal possible, make sure to check out any exclusive manufacturer incentives. These come directly from the auto manufacturer and include special interest rates on new vehicles, cash rebates, or exclusive lease deals that are not available if you go through another lender. If you take advantage of these types of incentives offered through companies such as Honda Financial Services, you can save significantly over the life of your car loan or lease.