Best Auto Loans for 2020
Buying a car often comes as a necessity and yet, other than perhaps your first car, the expense of buying a car can turn out to be a previously unplanned event. This is what happened to me, and so, I wasn’t financially prepared for the cost of buying a viable automobile, leading me to look into alternate routes. After looking around, the best option to help me get back on the road was a car loan.
Once I uncovered the car loan, otherwise known as an auto loan, I was able to get help with the auto financing for my new car. Through extensive research, I created this guide to help others find the best installment loans for buying a car, the best auto loan rates, and what you should know about taking out an installment loan for car finance.
In the sections below, you’ll be able to find out what you should consider before taking out an auto loan to get a car as well as how to finance a car.
What to consider before taking a personal loan
When entering into any money-lending agreement, there are many elements that you should consider before deciding if it’s right for you. It’s the same when looking at personal loans and the best auto car loan rates: it’s the costs, terms and conditions, restrictions, and down payments that you need to pay attention to when looking to take out an auto loan. Here are some terms that you need to understand:
- Loan Costs: The total loan costs are the sum of the amount borrowed, and the interest accrued over the span of the repayment period. The loan costs shall be detailed in the loan agreement, as will the date by which set amounts need to be paid back to the lender. An auto loan calculator can help you estimate loan costs.
- Interest Rates: Interest rates will often vary from lender to lender, often indicated as an annual percentage of the outstanding loan. When finding the best auto loans, the best auto loan rates will be a key factor.
- Down Payment: Many personal loans, especially installment loans, come with a down payment requirement. This is a sum of money paid upfront to commence the personal or auto loan. They are usually a predetermined amount to the sum of a percentage of the value of the car, often between ten and 20 percent.
- Terms & Conditions: Personal loans often come with a long list of terms and conditions, with car-specific terms and conditions included in an auto loan, and it’s very important that you read them carefully. While the best auto loans are from reputable lenders, you need to make sure that you are knowledgeable and prepared for anything that the contract’s terms and conditions entail. Typical terms and conditions sheets for car loan agreements often include the likes of an ‘Option to Purchase’ clause (which is a final fee to pay at the end to own the car purchased through the auto loan), and what happens in the instance of missed payments.
- Soft vs. Hard Credit Pull: As you’ll most likely know, lenders will often look at your credit to determine whether or not they should enter into a loan agreement with you. When it comes to an auto loan and auto financing, a company may perform a soft credit pull or a hard credit pull. A soft credit pull doesn’t impact your credit score and is just an initial look at your credit report. A hard credit pull sees a company perform a complete analysis of your credit report. If many of these stack up over a short span, it can potentially affect your credit score, so you need to make sure that you don’t undergo too many hard credit pulls at once while finding a car loan.
- Restrictions: An auto loan will invariably have set restrictions that the lender applies to car loan applicants. To gauge risk and establish their auto loan calculator, a lender will place restrictions such as a maximum vehicle age by the end of the auto loan, a certain mileage cap, if the vehicle is a foreign import, and if it had been previously written-off that limit the cars that you can get through their car finance plans.