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Auto loans: getting a fair deal
Financing can add thousands to the cost of a car. Shopping for the loan the way you shop for the car keeps that cost down.
What to know
- Get preapproved first
- Apply with a bank or credit union before visiting a dealer. Then you can see whether dealer financing actually beats it.
- Watch the loan length
- Longer loans lower the monthly payment but usually cost more in total interest and can leave you owing more than the car is worth.
- Compare APR and total cost
- Look at the APR and the total you'll repay over the life of the loan, not just the monthly payment.
- Add-ons are optional
- Extended warranties, GAP coverage and other add-ons are usually optional and negotiable. Ask for the price of each and decide separately.
- Read before you drive away
- Make sure financing is final before you take the car home. If a dealer later says the financing "fell through" and asks you to sign new terms, read them carefully and know your options.
Questions to ask
- What is the APR, and what is the total I'll pay over the loan?
- Which products in this contract are optional?
- Is the financing final, or still subject to approval?
Where to check
- CFPB auto loan resources
- Worksheets and explanations at consumerfinance.gov.
- Our true cost calculator
- See payment, interest and running costs together.
General information for US drivers, not financial, legal or mechanical advice for your situation. Consumer protection, title and lemon laws vary by state. The Nickel Stretcher isn't paid by any dealer, lender, insurer or brand mentioned here.