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Auto loans

Marissa Swanson

Down Payment

Paid to the lender before taking out the loan. Goes towards car purchase.


Amount you borrow to buy the car, NOT including intrerest and other fees.

Annual Percentage Rate (APR)

Total cost of the loan including the interest rate and other fees. Presented as an annual percentage yearly.A high APR is around 8% A low APR is arond 2%

Interest Rate

Annual fee to borrow money. Can increase, usually paid monthly along with payments on the loan.

Key terms

To buy a car, you must have money to finance it. An auto loan is money you borrow to pay for the car. There are many different kinds of loans, but with any kind, you will repay the loan in installments over an agreed-upon period, with interest.

What is an auto loan

Payments towards the loan generally begin anywhere from 30-90 days after purchase

Dealer financing is a loan taken out from the car dealer. This is a frequently used option. If your credit is good, a dealer financing loan may result in a manufacturer discount on the vehicle. Banks or credit unions often have a minimum and maximum amount... know what your future car costs before taking out the loan. Bank or credit union loans may take up to a week to obtain.

A larger down payment results in cheaper monthly payments.

Loans can be taken out from a bank, credit union, online lenders, and dealer financing...

Repayment typically spans over 2-7 years. A shorter period = less interest rates paid over the loan term. A longer period = larger amount of interest paid over the loan term.

Higher interest rates will apply if the loan is set for a longer than usual repayment period.

If you have a higher credit score, the interest rate can be lower. It also helps determine the amount you can borrow.

How do auto loans work?

Depending on where you get your loan from will determine when to get the loan. Check out your future vehicle prior to purchase to know your necessary loan amount.

Online lenders typically have a similar timeline to banks or credit unions.

Banks or credit unions take anywhere from a day to a week to obtain the loan.

With dealer financing, you set the loan term at the time of purchase.

when to get an auto loan

Pre-owned cars typically have a higher APR than new car loans. Pre-owned car loans are easier to be approved for based on credit scores.

pre-owned car loans

A larger down payment decreases your monthly loan repayments and may allow you to pay off the loan faster, therefore lower interest overall. If your credit is poor, saving up for a large downpayment is a smart decision to save money in the long run.

always remember.....

Motor Presentation

MarketWatch GUIDES

MarketWatch GUIDES

How to Finance a Car

Jovia Federal Credit Union

Auto Loan Calculator

Consumer Financial Protection Bureau

Baton Rough Telco Federal Credit Union

FAQ about Auto Loans

Negotiating an Auto Loan

Best Auto Loan Lenders

What's a good APR?


personal resources

Auto Loan Calculator | Bankrate®. (2023, November 15). Bankrate. https://www.bankrate.com/loans/auto-loans/auto-loan-calculator/How do auto loans work? (n.d.). Jovia Financial Credit Union. Retrieved November 21, 2023, from https://www.jovia.org/articles/5-things-you-need-to-know-about-auto-loansMartin, A. (2023, September 12). What An Auto Loan Is And How It Works. Bankrate. https://www.bankrate.com/loans/auto-loans/what-is-an-auto-loan/Robinson, D. (2023, October 5). How To Finance a Car: Get an Auto Loan in 4 Steps. MarketWatch. https://www.marketwatch.com/guides/car-loans/how-to-finance-a-car/What things can I negotiate when shopping for a car or auto loan? (2023, August 28). Consumer Financial Protection Bureau. https://www.consumerfinance.gov/ask-cfpb/what-things-can-i-negotiate-when-shopping-for-a-car-or-auto-loan-en-2132/What’s a Good APR for a Car Loan? Find Out Now | Baton Rouge Telco FCU. (n.d.). Www.brtelco.org. Retrieved November 21, 2023, from https://www.brtelco.org/talking-cents-financial-insights/whats-a-good-apr-for-a-car-loan-find-out-now#:~:text=What%20is%20a%20good%20APR