What are New Car Loans?

New car loans are extended by banks, or auto dealers for the purchase of new vehicles. Used car loans tend to be more difficult to obtain than new car loans. New car loans are usually more direct with less administrative hassle. There are four major categories of a new car loan:

  • Down payment or trade in value - The value you are placing as a down payment in cash, or through the trade in of your existing vehicle, will be deducted from the total sticker price to determine how much financing you need.
  • APR, or annual percentage rate - Your annual interest rate will be determined by the size of your down payment, the length of your loan and your personal credit score and financial history.
  • Monthly payment - Your monthly payment schedule will include a minimum sum which will be deducted from your total principal owed each month until the loan is paid off plus interest.
  • Loan terms - Your loan terms will lay out the options you have to pay off the loan early, refinance or trade-in the vehicle and the penalties you will incur should you choose any of these options.

Need an Auto Loan? Get a Free Quote Here!