Auto loans are loans used to purchase a new or used car, or to buy out an existing lease. The borrower obtains money from a lender, and pays the lender back over time, with interest. The interest rate affects what the monthly payment for the car will be. Until the last payment, the borrower doesn’t receive the title to the car or own it outright.
Before going to the dealer, it’s best to shop around for different auto loans, to be sure what you can afford. Credit score is the single most important factor on the interest rate you’ll obtain for your loan, but if your loan term is short, this can also help you pay less in the long run. Be aware, however, that compressing your payment into a shorter period will increase the monthly amount.
In order to qualify for an auto loan, most lenders require evidence of employment, and residency, as well as your credit score. The specifics of each loan will vary according to specific circumstances such as the loan amount, extended warranty requirement, loan term, down payment requirement, and annual percentage rate of change (APR). Finally, some car dealers will attempt to tag on extras such as rust-proofing, fabric protection, and security systems. If you roll these costs into your loan, the interest means you’ll pay more for these upgrades in the long run.
Finally, consider the following: Is there a prepayment penalty? Are there origination fees? Can payments be made online?
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- Submit online application and sign electronically
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- Apply for an Auto Loan Online
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- Auto loan refinancing
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- Auto loans for new or used cars
- Large network of auto dealers and direct lenders
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- No obligation and application fees
- No minimum credit score required
How We Compare Auto Loans
Types of Loans25%
The availability of auto financing options gives more flexibility to consumers. Whether you’re planning to buy a new or used car, working with an auto financing service that offers this option makes it possible for you to get that car you want. Auto financing also includes auto refinancing. This gives consumers the ability to make lower monthly payments by taking advantage of lower interest rates or stretching their payment period a few more years.
Franchise dealerships – the best auto loan services maintain a network or partnership with major dealerships across the nation. This makes it possible for them to hasten the auto loan process by working with them directly.
Private sellers – small or local dealerships and private sellers. Check this option if you’re planning to buy a second hand car and planning to fund the purchase through auto financing.
New Auto Loans
It might come as a surprise to you but some companies place a restriction on car makes and models they finance. Some auto financing companies place restrictions on independent dealers or those not affiliated with car an auto manufacturer.
Used Auto Loans
When purchasing a used car, be sure to check model year and mileage restrictions. Model year refers to the maximum vehicle age while mileage indicates the maximum number of miles a vehicle has run regardless if it qualifies under the model year restriction.
Refinancing makes it possible for you to make lower monthly payments either by taking advantage of lower interest rates or extending loan terms.
This option allows you to purchase your leased car. This saves you from incurring fees and penalties when returning your car. This include wear and tear, exceeding mileage limits and other return fees.
All of the auto financing companies reviewed here offer an online application or prequalifying portal for auto loan shoppers. This gives customers a convenient method of prequalifying for a loan. The entire process usually takes a few minutes and companies responded to qualified applications almost instantly. We also checked for other application options such as phone or visiting a branch.
- Visit a Branch
This refers to company requirements when applying for a loan. Your credit score will always play a huge role in determining your eligibility for a car loan and ultimately how much it’s going to cost you. This can be a problem not only for those with less than ideal credit scores but also for new professionals with little or no credit history.
- Credit score
- Residency and age requirements
- Nationwide availability
This contains important facts and figures when applying for an auto loan. This tells you how much car you can buy and how much it would cost you.
Maximum loan amounts – the amount the company is willing to finance your car purchase. Other things we checked include minimum loan limits for both new and used cars.
Loan terms – most companies have a maximum loan term limit of 72 months or 6 years. Longer loan terms translates to smaller monthly car payments.
APR – a few percentage point differences in your in your interest rates could spell thousands in savings during the life of your loan. An important sticking point when negotiating for the best auto loans.
Down payment- a 10 percent down payment is the norm when taking out a car loan. However, some auto financing companies offer zero down payment options for those with excellent credit.
Car makes and models – some auto financing services do not only place restrictions with the type of dealers they work with but also the makes or car manufacturers.
GAP coverage – some auto financing services require GAP coverage for new auto loans.
Extended warranties – required especially for used car loans whose manufacturer’s warranty has expired.