All You Need to Know About Car Loans

You have too much to worry about to be bogged down by car loans that are designed to make a profit at your expense. While auto financing is an unavoidable reality for some, searching for the best car loan rates can keep your finances balanced throughout the year.

There are several different types of car loans including new car loans, used car loans, pre-approved loans and refinancing. GOBankingRates brings you the facts you need to find the right loan for your next car.

How Car Loans Work

When borrowers of new or used car loans finance a vehicle from a lender, the financial institution considers the car collateral. The car is used as security, in the event that the borrower defaults on the loan.

Used cars are more likely to wear down and become inoperable due to age, condition and maintenance issues, which is why some lenders increase the range of used car auto loan rates to protect themselves from this potential loss. On the other hand, newer vehicles - while still facing an immediate depreciation just driving it off the dealership lot - do not pose as great of a loss, should the borrower be unable to make good on repaying their auto loans.

How to Find the Best Car Loan

There are a number of factors that contribute to the car loan rates you'll be offered by a lender.

FICO Score: A person's FICO score is one of the most influential guides that lenders use to determine whether borrowers are risky to lend money to.

Auto Loan Term: Another way lenders protect themselves and ensure that they get their money back on time and in less time, is to provide lower car loan rates for shorter car loan terms and slightly higher rates for longer terms.

Vehicle Type: As shared above, the age of your vehicle can play an important role in what rate you're offered.

Down Payment: Having an adequate down payment can help do a number of things like lower the total amount you'll need to finance , and by directly affecting the auto financing interest rate, even with dealer financing.

Best Car Loans Rates

Most Read Car Loans Articles

How to Use a Credit Card for a Down Payment

Here are some ways you can use a credit card for big purchases, like down payments, and what alternatives might offer a fiscally better choi...

Read More »

How to Make Money Off of Your Beat-Up Car

Ready to buy a new car? Here's what to do with your old beater.

How to Get a Car Loan With Bad Credit

Lenders are offering money to more borrowers with shaky credit. Learn the steps to get your loan approved.

7 Tips to Save Money When Financing Boats, RVs and Other Vehicles

Learn how you can spend less on your recreational vehicles.

Read More »

10 Things to Do When Shopping for a Used Car

Make sure you're getting the best used car deal by keeping these tips in mind.

How Your Credit Score Determines Your Auto Loan APR

Learn how your credit score can get you a lower interest rate on your auto loan.

Read More »

How to Save the Most Money on Your Houston Auto Loan

Here are five ways to get the most out of your car-buying budget.

Read More »

Top 7 Hidden Costs of Taking Out an Auto Loan

Learn all the costs involved in taking out an auto loan, so you can update your financial strategy.

Read More »

Types of Car Loans

Before you begin shopping for a car, it is important to know what auto financing qualifications you meet. Typically, auto loan rates are calculated based on the type of car you want to buy and your credit history. Additionally, you can get financing directly from a bank or have the dealer finance your auto loan.
  • Bad Credit Auto Loan
  • Used Car Loan
  • New Car Loan
  • Preapproved Auto Loan
  • Dealer Financing
  • Auto Refinance Loans

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

Comments

Featured In: