Your One Stop Resource for Saving Money.

Everything You Need to Know About Auto Loans

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.

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.

• What factors influence auto loan interest rates?
  Interest rates on auto loans are determined based on the condition of your credit, specifically your credit score. Lenders (including car dealers) use credit scores and their own established rating system to determine APRs for auto loans.

• How much should my down payment be?
  The more money you put down, the lower your monthly payments will be and the sooner you can pay off your loan. It's estimated that for $1,000 you put down, your monthly payment is lowered by $50 a month. In some cases, you have the option not to put anything down. However, if there is no down payment, your monthly car payment will be higher.

• If I decide to lease rather than buy, how long will the lease be?
  Leases are normally offered in 24, 36, 48 and 60 month increments. However, many leases come with stipulations, such as you can't drive more than a set number of miles each year. If you return the car with more miles than what was agreed upon, you may be required to pay additional fees. Be sure to read the fine print with any auto lease.