Frequently Asked Questions about New Auto Loans

Here are the answers to the most commonly asked questions about new auto loans. We'll discuss the different types of auto loans and explain how to estimate your loan's interest rate.

Do you only offer new auto loans?

Although our lenders specialize in new auto loans, they also offer a number of other vehicle financing options, including used auto loans and refinancing loans. Remember that a new auto loan will tend to have lower interest rates than a loan for a used vehicle, however. For this reason, it may actually be cheaper to purchase a new vehicle.

What kind of interest rate can I expect on my new auto loan?

The interest rate you receive will depend on the market, your lender, and your credit score. You can't expect to receive the best advertised rate if your credit isn't up to par. To estimate the kind of interest rates you will receive, look at the rates various lenders are advertising online. You might also input your information into an online interest rate calculator. Once you put in your credit score, down payment, and loan term, the calculator will approximate the kind of rate you'll receive on your loan for a new auto.

How much should I spend each month on my new car payment?

The payments on a new auto loan should not consume any more than 20% of your net income. Your net income is the amount of money you take home after taxes. You should be especially conservative in budgeting for your new car loan payment if you have other debts, such as credit card debt.

What terms are available for my new auto loan?

Our lenders offer a variety of new car loan terms. The most common terms range from three to five years. Typically, lenders will allow you to select a term of six or more years if your vehicle's price is high enough. As you select the term of your new auto loan, remember that loans with longer terms will have higher overall interest costs. The monthly payments will be lower, but the loan as a whole will be more expensive.

What does negative equity mean?

Negative equity refers to a situation in which the owner of a vehicle owes more on a new auto loan than the car is presently worth. For instance, if your vehicle's actual cash value is $10,000 and you owe $12,000 on your new car loan, you have negative equity of $2,000. If you tried to sell the vehicle or had an accident in which the car was totaled, you would end up losing at least $2,000.