Auto Loans Information and Savings

Auto Loans Information and Savings
  • 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 as your online resource for learning more about auto loans and to find a lender who best fits your needs.


SSheila Morrison, Jul, 2020

On April 21st my husband bought a new car in the state of Texas. On June 14th, he passed away from a heart attack. I did not cosign on the loan and it was in his name only (both car and loan). I am trying to give the car back to the lender because I cannot make the $657 a month payment. His estate will not be able to cover the debt. Can the lender force me to pay the difference of what they sell the car for and what was owed on the loan (we had not had it long enough to even make one payment). And if I don't pay, will it affect my personal credit?

DDaniel Cohen, Jul, 2020

Sheila, my condolences on the passing of your husband. I am not a lawyer so the information I share is not to be considered legal advice.

Did your husband's estate go through probate? Or did the two of you have a written an agreement to own property together as "survivorship community property," where community property can transfer to surviving spouse without probate?

I believe it is possible that you could be responsible for the debt as Texas is a community property state. Short of a judgment against you that would come about only after you were sued as a result of a lawsuit, I don't believe it will affect your credit, as it shouldn't be present on your credit report if the loan was solely in his name.

I strongly recommend that you speak with an attorney to make sure there are no loose ends and that you make the best decisions at a very tough time for you.

BBill S., Feb, 2014
I hope you can give me some advice or help in what to do about my situation. I bought a 2012 Chevy truck, brand-new, and got it financed with GM financial. My credit is not the greatest — in the high 500s. I am paying high interest and would like to refinance the truck to a lower interest rate and to lower my payments. My payment is $830 a month, which is not the easy to make, and I can't find a bank or credit union to refinance the truck. I would appreciate any kind of help you could offer.
BBill Admin, Feb, 2014
If you owe more than the vehicle is worth, lenders may not want to refinance your loan. They may also shy away from refinancing your loan because of your credit score. If that is the problem, focus on improving your credit score so you qualify for a refinance.

If other debts press in on you, use the Debt Coach tool to learn your options for resolving your other debts.
EErika Roe, Apr, 2013
My husband and I went to get a car for me to drive to work. I could not get an auto loan or be a cosigner with him, so we got the car in his name only. We agreed the car would be mine, I would make the payments, and when the car is paid off he would sign it over to me. I paid the down payment and 58 of the 60 payments. He separated from me in November and took the car with him so I told him he had to pay the remaning two payments. I think it's unfair I have paid for 95% of the car! About a year prior to our separation, he totaled my car. Then three months later he got a job. We were sharing the new car for at least 9 months. It was frustrating to share the car, but he felt like he had priority with the car just because he had a job. Sometimes I needed the car to drive to dr appts, etc., where his parents couldn't take me (I had to carpool with them). He threatened me to quit his job if he couldn't get to work. He talked about getting his own car for months but never did anything. He constantly complained that the accident wasn't his fault. I still think I should have gotten the car because I paid for it. It's completely unfair that I paid for it and he gets to drive it. Is there anything I can do - either to get the car or get some money from the car (to pay my current new car off)?
BBill Admin, Apr, 2013
Talk to a lawyer who has family law experience in your state immediately. When a couple divorces, each person is not allowed to possess whatever property they feel entitled to. The law doesn't work that way.

What I am about to write is an oversimplification, but it help illustrates the point I just made. If you live in a community property state and divorce, each spouse gets half of what the couple bought with the money each earned while married. If you live in a common law state and divorce, the rules are even simpler: Each spouse gets what they bought with their earnings.

There are many exceptions to the rules I just mentioned, and facts in each case matter. That is why you need to talk to a divorce lawyer who will analyze your finances and can advise you to your rights and liabilities.
EErika Roe, Apr, 2013
Thanks. Is North Carolina a common law state as you referred to?
BBill Admin, Apr, 2013
Regarding family law, North Carolina is a common law state.
JJill Foster, Mar, 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.
BBill Admin, Mar, 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.
EEduardo C., Feb, 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.
BBill Admin, Feb, 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?