How to Finance a Car Vs. Paying Cash

You might find it takes longer to obtain a check when financing, as lenders can take up to five business days to approve a loan. If you have to move cash around, receiving payment can take just as much time. Plan ahead to obtain a loan preapproval before you set out to shop if you plan to finance. Once you find the car you want, you can submit the vehicle's information to your lender and receive a check promptly. If paying cash, make sure your money is accessible before shopping.

Instructions

Paying Cash

1

Decide how much money you want to spend on a vehicle purchase. Consider your tax and motor vehicle fees, which can add thousands more to your purchase price. Call your state motor vehicle office to determine your area's tax rate and the cost of motor vehicle fees.

2

Submit for a transfer of the money between accounts, if necessary. Make sure you have the funds in your checking account before shopping. Otherwise, you might lose the car you want to buy if takes a week to obtain the funds you need for the purchase.

3

Find a car you want to buy and ask the seller how he'd prefer payment. Most sellers accept cash or a verifiable bank check, so get the seller's name if a bank check is acceptable. Go to your bank to obtain the payment.

4

Pay the vehicle's seller and get the car's title. Register and title the vehicle in your own name at a motor vehicle office. Pay any extra fees associated with the purchase, such as title, registration and tax.

Financing a Car

5

Check interest rates of auto loan providers before you determine where to apply for a loan preapproval. Rates are often advertised online and you can call lenders to determine rates. Be sure to obtain rates for the type of purchase you plan to make, as new car and used car rates differ.

6

Apply for a preapproval at your preferred lender in person or on the phone. Talk to a lending representative about your loan options, target monthly payment amount and whether you plan to offer a down payment. You can also choose to finance your motor vehicle fees and tax or pay the fees separately.

7

Give the lending representative your Social Security number, date of birth, address, employment and income information for the application. Ask how long you can expect to wait for your preapproval. Once you have the preapproval, go over your loan's interest rate, term, monthly payment amount and find out which paperwork you have to provide to your lender once you find the car you want, such as a recent paystub, proof of address or a down payment requirement.

8

Find the car you want and obtain its identification number, which you can find on the vehicle's title. Also note any features on the car that increase its lending value. Include features like a sunroof, leather, alloy wheels or any other feature you think might increase the car's value.

9

Ask the seller whose name you should have the loan check made out to. Submit the vehicle information to the bank and wait for your final approval. Once approved, provide proof of full-coverage insurance for the vehicle (a requirement of auto loan providers), any additional information the lender required and sign your contracts to obtain your loan check.