Getting an Auto Loan

Buying a car can be fun. Figuring out how to pay for it? Not so much.

Unless you have the luxury of paying with cash, you'll need to deal with auto financing. Financing requires just as much thought and time as figuring out what car you want to buy. If you don't make the right decision now, you might penalize yourself financially and cause headaches for yourself for years to come. So with that in mind, here are some things you should think about when considering an auto loan.

1.Compare Rates

 Shop around for the best rates. To do this:

• Call around to local banks and ask what the interest rates are for car loans.
• Start with your own bank or credit union; credit unions often have better rates than banks.
• The easiest way to find out rates is just visit one of the online sites that lists national and local bank loan rates, as well as those of online lenders.

Use the annual percentage rate (APR) of the loan as your standard when comparing. A difference of just 1% adds up over a loan's lifetime. Be sure to check out online lender sites, too. They have great rates and a variety of contract lengths. Finding out the cost of a loan doesn't take a math degree. Most online financing sites have calculators that crunch the numbers for you.

2. Dealer Financing

  Of course, you can always go with dealer financing. The dealer might have the best deal available―if not, find the best rate elsewhere and ask the dealer to beat it. But beware when dealing with the dealer. The dealer's just the middleman, and usually it's the most expensive way to go. Of course, those 0% financing deals sure do seem attractive and sometimes they really are a great deal, but beware because they usually come with short-term leases. Also, to qualify for those leases, your credit needs to be top-notch. And a large down payment is usually required. If you decide to go with dealer or manufacturer financing, make sure the transaction is completed and approved before you leave the dealership. If you fail to do this, the dealer might call you in a few days to tell you that the financing fell through, and then try to stick you with another lender at a higher interest rate.

Factors Affecting Your Interest Rate

•    The exact interest rate you'll pay depends on a number of factors. The top factor being your credit. The higher the number, the lower your rate. It's a good idea to obtain a recent credit report to make sure you know what's on it.
• The longer the length of the loan, the higher the interest rate you'll pay. And usually, used car loans have higher rates than new car ones. Also, it's easier to get a longer-term loan for a new car than for a used one.
• The most popular loan contracts are for either 48 or 60 months. Longer lengths enable you to have a lower monthly payment, and they also might make a higher-priced car suddenly fit into your budget.  More months equals higher interest rates equals more money.
• A long loan length also may not make sense if you don't want to keep the car for more than a couple of years. 

 Keep in mind that having an existing loan makes it more difficult to trade in a car.


Now that you're armed with loan knowledge, shop our selection or new, used and certified pre-owned cars!