Sometimes, comparing auto loans is more challenging than actually securing them; however, the process doesn’t have to be impossible. There are actually some easy ways to go about comparing auto loans, which in turn can make buying a car simple. It’s just a matter of making equal comparisons whenever possible. Here are a few examples:
- Compare Total Up-Front Fees and Charges. When comparing auto loans, dealerships and lending companies can confuse you with their unique terminology. To get over this hurdle, you can compare the sum of all fees and charges. This way, you can easily decide who’s offering the best deal.
- Check the Annual Percentage Rate (APR). When buying a car, it’s always important to look at the APR, which includes the interest rate on the loan in addition to the lender fees and charges. In other words, this is the true annual cost of the loan. By comparing APRs, you can even the playing field so that comparing auto loans is that much easier.
- Look at the Total Cost of the Loan. Taking a look at the total cost of the loan (all of the monthly payments, plus all fees and charges) is a great comparison tool. It helps to provide a simple layout of how much you can expect to pay over the life of the loan. This can also help you avoid falling into the trap of settling for low monthly payments that eventually balloon in price, resulting in you spending much more in sum than you originally intended.
- Unique Payment Circumstances. If you’re considering making extra payments each month, or paying the vehicle off early in one lump sum payment, it’s good to look at how different lenders view these circumstances. Some may charge a penalty or fee for early loan completion, while some may reward you for special arrangements. Checking these circumstances can make comparing auto loans that much easier when buying a car.
It’s no secret that comparing auto loans can be complicated. But if you take your time and consider a number of circumstances, you’ll find that acquiring financing when buying a car is simpler than you thought it was.