You always have two options in buying a car. You can either pay for it in cash or you can finance it or pay it in monthly installments but with a downpayment or more like the earnest money. To finance a car is to provide a payment that confirms contract while you pay for it monthly.
What happens when you finance a car?Let’s start with the basics – what does it mean if you finance a car?
Financing a car is paying for it in installments. You would have to pay something for the downpayment and then you need to pay a monthly amortization rate to suffice the price of the agreement. The agreement can run up to five years and then, the car will be fully paid.
It is always a simple transaction when you buy a car in cash. All you need to do is just pay one large sum of money, then you can take your car home. No need to pay for monthly installments plus the interest.
But the thing is, you will have to set aside money little by little so you may be able to pay for the car in full. Meaning, it may take a while before you get the car that you like. And for sure, you do not want to empty your bank account just to be able to buy that dream car of yours, right?
That is why financing is so popular. It has actually become the first option actually in buying a car. You may ask why? Because you get the car that you like and right away.
A lot of people see the fact that paying for a car in cash is ridiculous. Not only will it empty your pockets, it’ll also be difficult for you to adjust if you’ve already experienced that sum of money.
Skip to content 