The essential guide
What is auto loan?
Separate the vehicle price from the financing decision. Compare the out-the-door price, APR, term, total interest, and value of any trade-in.
Quick path
Explore auto loansHow it works
The basic idea
Compare auto loan options first, so the dealer is negotiating against a rate you already have. Providers evaluate eligibility and set their own terms. Your goal is to compare equivalent offers, understand the complete cost, and choose only what fits comfortably within your budget.
What to compare
- APR and total finance charge
- Loan term
- Dealer add-ons
- Prepayment terms
When it may make sense
- The full vehicle cost fits your budget
- You compared outside preapproval
- The term is not longer than you expect to keep the car
Risks and watchouts
- Negotiating only by monthly payment
- Rolling negative equity forward
- Optional products added to the contract
What to prepare
- Target out-the-door budget
- Down payment and trade details
- Income and residence information
- Insurance estimate
Common questions
Why get pre-approved before shopping?
A pre-approval turns you into a cash buyer at the dealership and gives you a rate to beat. Dealer financing can still win, but you will know if it does.
How long a term should I take?
Shorter is cheaper. Long terms of 72 or 84 months lower the payment but raise total interest and keep you underwater on the vehicle for longer.