You can use an auto loan calculator to translate “X” thousands of dollars into a monthly payment for your vehicle purchase or refinance. Our calculators work the other way, too: put in your preferred monthly payment and find out how much car you can afford.
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How much auto can you
Just as you have to pay for a car, you have to pay for a loan. Your car loan’s annual percentage rate, or APR, represents how much that loan will cost. The best way to get the lowest APR is to shop around for a loan, and not just accept what the dealer tells you is the best deal.
How much your APR will be depends largely on the car you want to buy or refinance, your credit history (that is, how well you paid off loans in the past) and your ability to pay now.
You won’t know your APR until you apply for an auto loan directly from a lender — ideally, more than one — to get a prequalified or preapproved auto loan. Potential lenders include your bank, credit union or online lender. The better your credit score, the lower your APR is likely to be. Average APRs in early 2019 for loans on new cars hovered above 6%, according to Edmunds.
Prequalified auto loan. For a prequalified auto loan, it’s not necessary to have a specific car in mind. A prequalified auto loan is when the lender approves you for a loan up to a certain amount, for a certain APR, within limits. Once you have a prequalified auto loan offer you like, then go pick out your car. It will not hurt your credit to apply to several lenders any more than it does to apply to one if you do all applications within a 14-day window.
Preapproved auto loan. For a preapproved auto loan, you typically have to apply with information on the specific car you want.
Prequalified or preapproved, it’s not official until you sign a finance contract for the car. When you go to the dealership with a prequalified or preapproved auto loan offer, ask the finance manager to beat the APR your lender offered. Yes or no, you’ll know you got the best deal.
The typical auto loan is between 60 and 72 months (5 to 6 years). The longer the loan term, the more expensive it will be. Don’t be fooled by the low monthly payment of an 84-month auto loan — the total cost of that loan will be much more than a shorter term would be. Many experts agree that an extremely long auto loan is a bad idea.
Most lenders make applying for an auto loan simple and pretty quick — just make sure you have the right information before you start:
The specific lender you apply to may ask for less or more information, but those are the most commonly requested.