How to choose the best car loan for you

July 06, 2020

When looking for a car loan, shop around and select the terms that make the most sense for you.


Believe it or not, deciding how you will finance your car is more important than choosing a color. Doing some homework before going to the dealership could help you score better terms on a loan than what the dealership might offer.


Where to get the loan

Car dealerships are often eager to provide in-house financing for your vehicle purchase, but it might be wise to speak with additional lenders before making your decision. Shop around. Prepare a list of questions and asking potential lenders for details on total price, length of loan, interest rates and potential penalties.


What you’ll need to qualify

You will need the following information to apply for a car loan:

  • Full name and proof of identification
  • Address and a recent utility bill
  • Employment history and monthly gross income
  • A list of assets and expenses
  • Signed authorization for the lender to obtain your credit report
  • Car details, if you have them (year, make, model, etc.)

Figure out how much you want to spend each month on your total car payment. Then review of the best available auto loans for you. When you do some research before visiting dealerships, and understand what options you have available, it puts you in a better position to negotiate the terms of your deal. Remember, many car dealerships are likely to make offers that are most beneficial to them, not the customer.


How to finalize your selection with a car loan calculator

Once you have a vehicle in mind, hone in on the total cost of the vehicle (remember things like tax, title and license on top of the base price) and your options. Use a car loan calculator to determine exactly how much you’ll spend depending on the length of loan and financing options you choose.

The auto loan calculator will factor in:

  • Total cost of the vehicle
  • Value of any trade-in vehicle
  • Required down payment
  • Approximate interest rate
  • Sales tax in your state
  • Length of the loan

Determine if the car you want is something that makes sense for you financially based on your loan options.


Applying for the loan

Once you know which car and loan you want, it’s time to officially apply. If you have a great credit history and secure, long-term employment, approval could be instant. In some situations it might take a day or two for approval.


If you're ready for a new or new-to-you car, learn more about your financing options.

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Start of disclosure content

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, home equity and credit products are offered by U.S. Bank National Association. Deposit products are offered by U.S. Bank National Association. Member FDIC.