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Auto Loans Information and Savings

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HIGHLIGHTS
  • Avoid financing a car you cannot afford
  • Know your credit score before getting an auto loan
  • Compare banks, credit unions and the dealer's finance arm loan offers before securing a loan

Getting an Auto Loan

Shopping for auto loans can be confusing. Buying a car is one of the biggest purchases you will make, so it is important to make a plan before you make a decision. Remember, the person selling you the car wants to make the sale; it is up to you to make sure that you have done your homework so you can make the best purchase necessary.

Everything You Need to Know About Auto Loans

The first thing you will need is a budget. Don't buy more car than you can afford. You will need to decide whether a used car or new car is better for you. You will also need to choose between buying a car and leasing one.

When looking for auto loans, you should know your credit score before you start shopping for a car and for auto loans. The more knowledge you have about your credit situation, the less likely you will have a finance officer stick you into a worse auto loan than you deserve.

Auto loans are offered by different sources, such as banks, credit unions, and the dealers' own finance arms. Make sure to shop around, to get the lowest interest rate and a payment you can afford.

Use Bills.com as your online resource for learning more about auto loans and to find a lender who may best fit your needs.

Comments (31)


Jill F.
Syracuse, NY  |  March 24, 2012
A few months ago my husband bought a new car ($18000 or $322/month). This past month we had the opportunity to refinance our house from 30 to 15 years, and 6.5% to 3.25% (we are now paying about %75 less including taxes and insurance). The only other loan we have is a student loan $125/month. We have about $15000 in savings for emergency. Now my car is close to being unsafe to drive. We were told that because we just got the car and refinanced, our credit scores will be too low to get a decent interest rate. My credit score was 708 right as we were closing on the house. We are willing to spend a small portion of our emergency fund, but what I really want to know is how long until our credit scores increase enough for a good rate on a car loan.
Bills.com
March 25, 2012
It is impossible to accurately predict the amount of time it takes for a credit score to increase. The addition of the car loan, if it was taken on your husband's name only, will not affect your credit score. If you make you payments on time, the refinance, should have a short term affect on your score. Also check to see if your credit utilization has changed. Be careful not to keep your credit card balances down, below the 30% level. Also, keep your loan searches within a similar period, because all pulls for the same product within a 14 day period are considered as one pull.
Eduardo C.
Dallas, TX  |  February 23, 2012
My wife and I are trying to buy a used car but her low credit score, 500, is causing the interest rate to be 21%. We have 3000-4000 to put down, but don't know if we should get the car and hope that her score improves in 6 months to 1 year and refinance or if she should just talk to a credit counselor and repair her credit in 6 months and see if her credit scores rises significantly to reduce the interest rate. Which scenario seems to be the smartest move. She has no delinquent debt of any sort and we pay all of our bills and credits cards on time the reason why her credit is so low is a mystery to us.
Bills.com
February 26, 2012
One solution is to buy a used car for $3,000-$4,000 that you have. You won't have the same car that you were looking to buy, but you won't be without transportation and you will save a ton of money.

You need to figure out why her score is low, so she can take the proper steps to improve her score. The concept of taking out the loan and then refinancing is not a bad idea, but what if her score does not improve quickly enough to refinance to a good rate? Can you afford to keep paying the exorbitant 21% interest?
D.J. W.
Crestwood, IL  |  January 31, 2012
Prior to the recession, my credit scores were all in the mid to upper 700’s. I was laid-off and either unemployed or under-employed for three years. Ultimately I became delinquent on just about everything. Now my scores are in the low 500’s. I am now working again in my chosen profession and earning what I had been and slowly getting back on my feet. I have been working for only 4 months. Last week, my paid-for car had been rear-ended and deemed a total loss. No injuries thank God. I now need an auto loan sooner than I had a chance to repair and heal my credit. I am appalled at the interest on the loans I qualify for. I know you said to shop around. Any advice or direction on where to look where I’m likely to find the best quotes? I know its not going to be good. But what I am finding should be illegal. Its high-way robbery.
Bills.com
February 01, 2012
I have no blinding insights for you, unfortunately, that I am sure you have not considered already. Let me assume for a moment that you have a normal job that does not require you to wow or chauffeur your clients. If so, here is my thought: Take your insurance settlement and buy what people in my hometown call a "beater." Find something cosmetically challenged but reliable and put the minimum required into maintaining it while you save for something better. If you are in a sales position where you need to chauffeur your clients, then you will need to find a cosigner to qualify for reasonable interest rates.
Mike H.
Highland, IN  |  January 21, 2012
my elderly friend bought a used car, she put 3k down,her credit is in the 500's.they said she had to buy a car in the 10k range,her payment is in the 400's,she said it was to much and didn't want it but they already had the 3k and said it was to late to back out.it's been 4days now and still wants to take it back.does the dealership have to oblige her?
Bills.com
January 21, 2012
Consult with a lawyer in your state to help you write a letter to the dealership explaining the situation. If the people at the dealership have any sense of compassion and empathy for others, they will cancel the sale. If they do not, then your friend's lawyer may need to take a more active role and negotiate a settlement.
Aundrea E.
Crawfordsville, IN  |  January 17, 2012
my husband bought a car on a lease and his step father co signed for him both names are on the paperwork but no one has a clear title because it is on a lease. Now my husband was making the payments for a while and he had some hard spots at work and did not get enough money to make a payment when he told the co-signer he freaked out and took the car. while he has had the car kept from my husband the orignal buyer of the car he was letting our sister in law pay for the car and drive it but she just bought a new car and does not want the car anympore so my husband wants to start making the payments again and use the car but his step father (co-signer) will not allow him to touch the car. if my husbands name is on that lease as well can he use the car without the co-signers permission? and what are the laws on this so-signer/ signer relationship?
Bills.com
January 21, 2012
Both signers on a joint lease have the legal right to operate the vehicle. One preventing the other from using the vehicle is contrary to the lease, which is probably spelled out in the lease contract. The leasing company will not care if one or the other or both operate the vehicle as long as the conditions of the contract are met.

If the two parties cannot agree amongst themselves who pays for or operates the vehicle, then both should agree to take this dispute to a mediator.
Michael Y.
Sarasota, FL  |  December 29, 2011
A friend took out an auto loan at 28% interest. I've just looked up Fla. Statute, and 18% is the maximum allowed by law. What steps should we take to get to the 18% rather than 28?
Bills.com
December 29, 2011
Start by contacting the Florida Attorney General's Citizens Services. Use the link above or call (850) 414-3990 or toll-free within Florida (866) 966-7226. The Hotline serves as the initial point-of-contact for consumer complaints.
Damian C.
Oak Park Heights, MN  |  October 26, 2011
I have a question. I am a hardworking person has had a lot of bumps in the road. I work hard and try to pay my bills on time. I had great credit at one point, but due to divorce and other hardships my credit has suffered now I'm an a spot where I have a lot of collection activity and didn't even know it. I need to purchase a car and with all the collection activity I cannot reestablish credit . If I pay off the collections (not credit card debt) how do I go about getting started on rebuilding my credit. As of now all I have is negative credit. When I pay all the debt off I will be left with no credit. Thank you.
Bills.com
October 26, 2011
Damian, it takes some time, but if you take the right steps, you start building your credit and then improve your credit back to a strong level, in just a few years.

If no one will grant you credit, you may need to start by getting a secured credit card. Make sure that the secured card that you apply for reports to the three main credit bureaus.

When it comes to the old collection accounts, paying them off may be necessary to get a loan, depending on how old they are, but check to see if the debts are so old that they have passed the statute of limitations. If any have, you may have no legal obligation to pay the debt.
Nora A.
Lancaster, NY  |  October 04, 2011
Hello, I am a 20 year old college student. I desperately need a new vehicle, however, my parents are not able to sign for me. I was looking about 6 months ago, and at the time, I was approved for a loan in my name. This was because I have 5 credit cards all with good or no balances that I pay on time. I did not end up buying the car, however, because it was just not the right time. However, now I do need to make a move. I am going to pay off my credit cards tomorrow. How long does this take to show up on my credit report? I have $3,300 dollars in debt out of a limit of $8,500. I have no bad records on my credit report at all. I guess my question is, will I be able to get approved, even though I looked in to my credit report in the last 6 months for another car I didn't end up getting? AND, should I wait until my credit score changes after I pay off the majority of my debt? Thank you!!!!
Bills.com
October 05, 2011
Most banks and finance companies report to the bureaus monthly. So, depending where you are in the reporting cycle when you make your payments it could take about one month.

Have you seen your credit score recently? Maybe you can qualify for the loan right now. Your credit utilization is a bit higher than idea, but it is not terrible. You are currently using about 38% of your available credit, when it is best to keep it at 30% or below.

If you have the ability to pay off your credit cards in full, I am not sure that is the best use of your money. Shop for an auto loan and see what you can get now. Contact a local credit union, as they often have excellent rates and will not try to jam you into something the way a car dealer may. The auto-loan rate available and the interest rates you pay on your cards are important factors, too, as is the size of your new car payment. You may want to make a larger down payment, depending on some of these factors.

Your having looked into a car six months ago may have lowered your score a tiny bit, due to having your credit pulled, but should not prevent you from getting a car now, if you were eligible before.
Missy C.
Spring, TX  |  September 30, 2011
I co-signed for my deadbeat ex-boyfriend about 5 yrs ago and separated shortly thereafter. I had 780 credit at the time and after him making about 15-20 payments 30 days late AND 10 or so payments 30 days late; my credit is down to a whopping 540. I am the primary and only put him on the load so his insurance would cover any accidents that he might have. I went in to trade my Cadillac in for a differnt vehicle and when they ran my credit they told me the damage that he has done; letting me know that I wouldn't qualify for any loan! I'm about to pay a specialized Credit Analyst to dispute a few things and try to help me get with the Credit agency that is not willing to help me; they only want to take payments over the phone. I've tried to get in touch with my ex and he will not answer my calls. What are my rights as a primary on this loan and what do I do to get my score back in the 700 range? I would like him to refinance the remaining $10,000 on the truck IF POSSIBLE and get it out of my name ASAP... PLEASE HELP!!! Best Regards, Missy
Bills.com
October 02, 2011
Bills.com receives numerous emails, questions, and comments from people, like you, who have suffered as a result of co-signing on a loan for someone. The exposure that the co-signer exposes her or himself to and the lack of leverage to compel the person that he or she co-signed for to take responsible action are primary reasons why I don't recommend co-signing in most situations.

You may need to contact a lawyer and pursue legal action against your ex, in order to find a way to get him off the title so you can sell that car.

You can take all the right steps, separate from this issue, to repair your credit, but I am not sure anything will cause a significant rise in your score until the car issue is put behind you. I would be wary about paying a fee to improve your credit, without a companion strategy for dealing with the car.
Manette G.
Yucaipa, CA  |  September 15, 2011
I purchased a used vehicle on 7/7/11, the dealers told me that I didn't have a payment for 45 days, in which I asked them to give it to me in writing. I never received a bill, coupon book nor letter from the finance company. I traded my car and gave $3000 in cash. On the 46 day, my car was repossessed. I contacted the finance company and I could never get thru. When I did, I was told that it was the last day to get out my vehicle. First I had to send $515 vua Moneygram first and she would release my vehicle but I also had to pay $345 repo fee, 145 tow fee, 10 inventory fee, and $15 a day storage fee from 8/22 until now. Pretty much I was told that I would not be getting my car back nor my down and trade in, they messed up my credit and refuse to honor the contract.
Bills.com
September 15, 2011
Contact both an attorney and your state's Attorney General's office, Consumer Affairs division. There may be a special department that oversees used car sales.
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