Shopping for an auto loan can be an overwhelming task. The auto industry language can be very difficult to understand. Here is a detailed breakdown of the different loans offered in the auto industry and when to use them. If there is any question we can help you with, either email us or click on the tab in the bottom right and we will do our best to walk you through your auto purchase.

Comparing Auto Loan Providers

It pays to shop around when you are looking for an auto loan. The providers we offer will help with your auto loan shopping by comparing auto loan rates and loan terms from multiple lenders. Compare different types of auto loans, including:

• New car loans
• Used car loans
• Auto refinancing options

Regardless if you are buying from a dealer or a private seller make sure you are getting it for the best price and not only based on the dealers in-house financing options.

Auto loans are either unsecured or secured. An unsecured auto loan does not allow the lender to repossess the vehicle if a payment is missed. The lender can still go through the legal steps to repossess the vehicle if you stop paying. If your credit is excellent, your interest rate may be as good as a secured loan but in most cases, a secured loan is a better choice.   

The main benefit of a secured auto loan is lower interest rates. With secured loans, the lender will normally place a lien on the vehicle you've purchased. In some cases, a secured loan can be placed on other assets like your home or property if required. Make sure you know exactly what the lender is using to secure your purchase. The lender can repossess the asset that you agreed to lien.

Auto Refinance

If you have a difficult time keeping up with payments, refinancing your vehicle may be an option. Refinancing the car loan can start the loan over with lower interest and a lower monthly term. Shop and compare from the many lenders offered. 

Lease Buyout

When we lease a vehicle, we have two choices at the end of the lease, either return the car when the lease expires or buy the vehicle for the amount owing at the end of the lease. We usually buy out the vehicle for a number of reasons.

• The value of the vehicle is higher than the lease buyout amount. You can sell the vehicle and make a profit
• You really like the vehicle and want to keep it
• You may not be in a position to buy a new vehicle and need to keep your monthly auto payment low

When we lease a vehicle, you are only paying for the car’s depreciation. This keeps the monthly payment low for the term of the lease. You will be provided the buyout amount on the lease documents when you are negotiating your purchase. 

The normal term of an auto lease is 2-4 years. Calculate the length of loan you will require when the lease term is complete. You may end up paying for this leased vehicle over 6+ years.

The Difference between a Simple Interest Rate and Precomputed Interest in an Auto Loan Contract

The simple interest method uses the amount outstanding on the day your payment is due. If you pay more than your monthly payment, this amount "should get smaller" as you pay down your loan. The precomputed interest method uses "the original payment schedule" to figure interest, even if you make payments early.

If you may be in the position to prepay or pay the vehicle down faster, you will not want to be in a precomputed auto loan. The online lender's and banks typically use the simple interest model. If you plan on making the payments on time and not prepaying early, either payment method will be the same. 

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