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:: HOME :: CREDIT CARDS :: LONG DISTANCE :: INTERNET SERVICE :: LOANS · Main Page · Auto Loans · Home Equity Loans · New Mortgage Loans · Refinance Loans · Student Loans  Loan Consolidation New Student Loans Tips and Advice Calculators· Lines of Credit · Debt Consolidation · Credit Report & Score · Tips & Advice - New! · Calculators - New! · Loan Glossary · Loan FAQ · Info & Resources :: CELL PHONES :: INSURANCE :: ONLINE BANKING :: KNOWLEDGE :: MORE |
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Loan Tips and Advice Center Topic: Auto Loans See the subtopics menu for tips and advice about auto loans. For additional information about loans, see the topic list directly below.
 Auto Loan CalculatorsHow accurate are auto loan calculators? Auto loan calculators can be extremely useful tools to estimate the cost of your monthly car payment based on the amount you borrow, the interest rate, and the number of months the loan is written for. All things considered, these calculators are usually fairly accurate. By utilizing a calculator before you actually apply for an auto loan you can get a good idea of how much money you can afford to borrow and still comfortably make your car payments each month. Use your monthly budget to figure out what your maximum affordable car payment will be, and then find an acceptable car that falls within those limits. If you find the car you want at a price you can afford with a reasonable interest rate but find that the monthly payment deviates largely from what the calculator predicted, examine the loan documents closely. Make sure that the lender hasn't tacked on extra products that can increase your annual percentage rate. Things like guaranteed asset protection, life insurance, and disability insurance can be the culprits in this instance, and you can request that these items be removed. ^ Back to top Choose Your Terms WiselyDoes it matter how many months my auto loan is amortized for? If a lender is willing to allow you to draw the terms of your auto loan out for several years, don't immediately jump at the option before looking into what it means in the long run. The most common auto loan amortization is 60 months, or five years. This is an industry standard, although other loan terms can be offered including lower (48 months or less) and higher (72 months or more) terms. One thing you should realize is that in general, the higher the number of months your loan is amortized for the higher your interest rate may be. This does not usually apply to loan terms under sixty months. In other words, whether your loan is 36-months or 48-months, you will probably have the same interest rate. It's when auto loans creep past the 60 months amortization that interest rates may begin to climb. All keep in mind that although loans with longer repayment terms often have lower monthly payments than short-term loans, you do usually end up paying more interest over time. For example, a 72-month loan will have a lower monthly payment than the same loan amount and interest rate given with a 48-month repayment term. The borrower, however, will end up paying more interest overall with the 72-month loan, despite the lower monthly payment. See our monthly auto loan payment calculator to estimate what your monthly payment will look like with differentinterest rates, repayment term lengths, etc. Instead of securing an auto loan with a er amortization you may want to consider putting a sizable down payment on the car (if possible). You may also consider buying a car that costs less so you can avoid extending the repayment period and also avoid ultimately paying more in interest. ^ Back to top Low Interest Car LoansHow can I get the lowest interest rate on a car loan? If you have good credit and do not have an abundance of debt you can usually find an attractive interest rate for a car loan. Low interest car loans are not too difficult to find if you know where to look for them. Start by checking with the financial institution that you already do business with. Some banks and credit unions offer lower interest rates and easier application processes to applicants who already have accounts within the system. In particular, credit unions usually offer some of the lowest interest rates for both new and used car loans. Be sure to also conduct an online search for low interest rates because you will surely find some very competitive rates offered by various lenders. If you're wondering how to get the very lowest interest rate on a car loan, here is one general formula: A person with excellent credit who can afford a sizable down payment and has a low debt-to-income ratio can generally get the best deals. In addition, if that borrower is purchasing a new car and amortizing the loan for forty-eight months or less, he/she will often get a very competitive interest rate for the car loan. Even if you do not fall into this category exactly you can still find some great interest rates, you just have to take the time to look for them. Be sure to research all of your possible options - don't simply jump at the first opportunity presented to you. ^ Back to top More Than RatesWhat else should I look for besides the lowest interest rate when I apply for a car loan? When shopping around for a car loan you may find yourself consumed with finding the lowest auto loan interest rates possible. You need to keep in mind, however, that there is more to a good loan than just the interest rate. You don't want to be lured into a particular car loan because you are blinded by an attractive interest rate only to later discover that the lender tacks on various fees and insurance coverage that makes the loan more expensive. There are certain terms that you should be on the lookout for when you apply for a car loan. Any time you see the words "insurance" or "protection" accompanied by a dollar figure you need to ask for clarification because this can be a lender's way of tacking on unneeded coverage in order to get more money. Also look for the term "prepayment penalty" on the loan paperwork, because this means that you will be charged a fee if you pay the loan off early or refinance the loan. Take a look at the fees that would be associated with late payments and other aspects of the loan, and be sure that the low interest rate you are receiving isn't going to be overshadowed by other costs associated with the car loan. ^ Back to top Auto Loan TermsWhat auto loan terms should I be familiar with before I apply? Auto loans can be relatively easy to understand, but if you aren't familiar with some of the common terminology it can be very easy to become a little confused about the process. For example, when you seeincredibly low auto loan interest rates advertised followed by the terms "OAC" or "WAC" you should know that this means "On Approved Credit" or "With Approved Credit." In other words, simply because these low interest rates are advertised it doesn't mean that you will be approved with that particular rate. Only applicants with the best credit scores receive these rates, while all others are usually offered interest rates that are higher. Another auto loan term that can be confusing is "We Finance Everyone" or similar wording. This type of claim is common at dealerships that do a lot of business with people who have less-than-perfect credit. If an applicant's credit is extrememly poor, the dealership will often require that applicant to make make a hefty down payment in order to secure the loan. In addition, loans given to those with less-than-perfect often carry higher-than-average interest rates and may include additional fees as well. When researching your auto loan options, be sure to watch for these types of terms and be aware that the latest and greatest deals are often reserved for those with the highest credit scores. ^ Back to top No Credit, No ProblemHow can I get a decent interest rate on a car loan if I don't have any credit? Applying for an auto loan without any credit history can be an extremely frustrating experience because you may be treated as though you already have bad credit when in fact you haven't even begun your credit history. Consider bringing in a cosigner. A cosigner is someone who agrees to pay the loan in the event of you defaulting on the loan. Since the cosigner is equally responsible for the loan, their credit history is taken into consideration too. So, a cosigner with fantastic credit may result in a much lower interest rate than if you had applied alone. Keep in mind, however, that cosigning is not something that should ever be taken lightly. The auto loan will show up on your cosigner's credit report, just as it does on yours. So, if you have a late payment you're not only affecting your credit score but also the credit score of your cosigner. For this reason, only use a cosigner who is actually willing (and able) to take over the monthly payments if you aren't able to for one reason or another. ^ Back to top
Should you refinance your existing mortgage? This calculator can help you that find out. Enter the specifics about your current mortgage, along with your current appraised value, new loan term, new rate and closing costs. Together, this can determine how much refinancing might save you overall. · Calculate how much you could save in interest
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