You have decided to buy a car, but you feel overwhelmed about how to finance it. While the process to obtain a car loan in USA isn’t that complicated, it might indeed seem a little daunting at first. Never fear though, once you have gotten a grasp of the basics, you will be able to make the right choice.
In this article, we are going to give you a brief explanation of everything you need to know beforehand about getting a car loan in USA.
Basic Car Loan Terms
One of the things that make the process of issuing a car loan seem more complicated than it really is, is the number of terms involved. For this reason, we are going to explain what each term means.
Interest: The interest or Finance Charge, is the amount of money you need to give to the borrower in order to issue the loan. You usually pay it in the form of Interest Rate, or ARP, in the monthly payment.
Car Loan Term: This typically means the length of the loan. You can find car loans with terms that range from 12 to 144 months, even though the most common terms are around 60 months.
Principal: This term refers to the balance of the loan. As the months progress, the principal will decline.
Down Payment: When you purchase a car, you will need to pay a down payment upfront. The financing that comes from a car loan is the difference between the price of the car you are purchasing and the down payment that you provided.
Monthly Payment: This is the agreed amount that you will pay each month. The payment includes both a standard amount for the load principal and interest.
Check your Credit Score
Before you begin any process, you need to figure out your credit score. The better your credit score is, the lower your loan’s interest rate will be. The three credit bureaus, Experian, TransUnion, and Equifax, calculate the credit score in different ways, so you need to get a report that includes all three of them.
Companies that Provide Car Loans in the USA
Now that we have gone through the basics, it’s time to compare the companies from which you can issue a car loan. Those companies are the following.
myAutoloan: The loans provided by myAutoloan range from $8,000 – $100,000, while the loan term is between 24 – 84 months. The interest rate for this loan ranges from 1.99% – 27% and you must have a credit score of 500 or above. The basic requirements to get a loan from here are that you should be over 18 years old and be a resident of the US, except Alaska and Hawaii. The vehicle that is financed through this loan must have a maximum mileage of 125,000 miles and must be 10 years old or newer.
LightStream: Loans from LightStream range from $5,000 – $100,000, with an interest rate of 3.34% – 17.49%. The loan term can vary between 24 – 144 months. There are no restrictions as to the type of vehicle that can be financed through this loan, however you must possess a good to excellent credit score.
Capital One: A loan from Capital One starts at $4,000 and has an interest rate of 3.99% – 10.08%. The loan term can vary between 36 – 72 months. To be eligible for this loan you need to have an income of $1,800/month and be a resident of the US, except for Alaska and Hawaii. The car you are purchasing must only come from the Capital One network of dealers.
Chase: Loans from Chase have a starting price of $4,000 and an interest rate that ranges from 4.29% – 24.99%. The loan term can vary between 48 – 72 months. The only requirement for this load is that you must be at least 18 years-old. The car you are purchasing must only come from the Chase network of dealers.
Bank of America: Car loans from Bank of America range from $7,500 – $100,000, and the interest rate begins at 3.49%. The loan term ranges from 12 – 75 months. The only requirement for this load is that you must be at least 18 years old, or 19 if you are a citizen of Nebraska or Alabama. The vehicle you are purchasing must have a maximum mileage of 125,000 miles and must be 10 years old or newer.
Now that you know the basics of car loans, you can decide on the provider that best suits your needs. It would be advisable to begin the process of issuing the can loan before you even begin looking at vehicles.
After the loan is issued and you have purchased the car, don’t forget to buy insurance, so that the expenses for a variety of car damages are covered.