A car loan can be a great way to purchase the vehicle you need (and want) while building your credit at the same time. Be sure to comparison shop for the best loan deal, understand all the terms and conditions before you sign for a loan, and repay the loan on time every month.

Before you take out a car loan, it’s important to understand what you’re agreeing to, how your credit will affect your loan experience, and how an auto loan can influence your credit and overall finances. For many consumers, casually stopping by their local auto mall can turn into a big purchase with many researching their vehicle preferences with less attention towards the financing. Shopping around for an auto loan before taking a step into a dealership could significantly save money and even get you more car for your money.

Most people don’t have the cash required to buy a vehicle without financing, which is why when they’re considering the cost of a car, the total monthly expense is as important as the total price tag.

To determine how much car you can afford, consider the total monthly costs, including car loan payments, insurance, gas and maintenance. You also need to consider other monthly debt obligations you may have, such as credit cards, student loans and a mortgage.

Before making a major purchase, it’s a good idea to check your credit report and credit scores at least three to six months prior to your planned purchase.

The credit score needed to qualify for a loan will vary depending on the lender, since they will each have different criteria to grant you a loan and may use different credit scoring models, such as the FICO Auto Score 8, which has a score range between 250 and 900.

Also, there are lenders that specialize in approving loans for those with lower credit scores. These can come with higher interest rates and less favorable terms. For example, if you wanted to purchase a car for $30,000 with a five year term, the interest rate could be 11%. After the five year period, you would have to pay $9,140 in total interest. With the same loan amount and term length, but with an interest rate of 4%, the total amount of interest paid would be $3,150 or just over a third of what you would pay at the higher rate.

This is the amount of cash you have to put toward the purchase price of the vehicle. The down payment lowers the amount you need to borrow, which in turn lowers the total amount of interest you’ll pay over the life of the loan.

Any type of loan comes with interest, which is basically what the lender charges for allowing you to use their money to make a purchase. Your car loan interest rate and any fees your lender charges make up the APR. When you’re comparison shopping for a car loan, comparing APR can be a good way to assess the affordability of different loans.

This is the amount you must pay every month to the lender, by an agreed-upon date, to repay the loan. It includes both principle and interest. At the beginning of the loan, your loan agreement will specify your monthly payment and how many payments you must make to fully repay the loan. One reason people take a longer loan term is to secure a lower monthly payment. Because the lender technically owns your car until you fully repay the loan, they can repossess the vehicle if you miss payments.

A number of online lenders provide auto loans. These loans work similarly to direct lending from a bank or credit union. Some consolidating websites allow you to get quotes from multiple lenders by completing a single online form.

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