Are you applying for a car loan? If so, then you have to start by doing your research. There is no shortage of options and comparing them will help you get the best deal for your situation. When you’re ready to begin comparing car loans, use this guide as a stepping stone before diving into all the different numbers and numbers.

How do you compare car loans?

1. What are your options?

To help with your car shopping, there are several types of loans available. The first kind is the standard loan that most people take, as it’s written as a fixed-rate contract for 60 months (five years) with monthly payments. For this type of car loan, your credit score will determine your interest rate. The next type of car loan is a closed-end lease, which means that you will be able to use the car for a specific duration and return it once the lease ends. At this point, no more payments are required, and you own the vehicle.

The third option is an open-ended lease, which is similar to the closed-end lease except that once your lease ends, you can opt to buy the car instead of returning it. If you choose to keep the vehicle, your final payment will be larger than in a closed-end lease because you must pay off any remaining balance on your loan when you buy your car.

The fourth type of car loan is a dealer finance plan. It often offers lower rates than your credit score alone might qualify for, so you must ask about the details before making any decisions.

Finally, there are personal loans offered by banks or other lenders. Still, these are usually reserved for more significant things than car purchases because they require higher credit scores.

2. How to Find the Best Rate?

You must avoid paying more than you have to when financing a vehicle, so its best to shop around and research to find the best interest rate. You might have to put in some time, but it will be worth it in the end if you can save hundreds or even thousands of dollars on your new car purchase.

Your dealer is the first place to look for a pre-approved or guaranteed loan. Suppose you’re buying from a local dealership. In that case, they might be able to offer you the best interest rate on your car loan because of their relationship with specific banks and lenders. However, this will only apply if you’re buying the car at the dealership.

If you need to find your dealer, you can always check the manufacturer’s website. Dealerships that carry new cars may also offer their financial plans, which can be pretty competitive with interest rates offered by manufacturers.

When comparing car loans, it’s essential to look at all of your different interest rates and your fees and other expenses. If you’re not sure what an APR represents, it’s the loan’s annual percentage rate.

According to Lantern by SoFi, “A prepayment penalty is a fee that lenders may charge when you pay some or all of a car loan early.” For more information about what happens when you pay off a car loan earlygive them a call.