Lenders review your income, employment history, credit score, debt-to-income ratio, and credit report details. Credit scores typically range from 300 to 850 under models like FICO and VantageScore, and some lenders apply additional auto-specific scoring.

What you can do:

• Check your credit report for accuracy and dispute errors. Get free weekly reports from Equifax, Experian, and TransUnion at AnnualCreditReport.com.
• Know your credit score through your bank, credit card issuer, or free tools like NerdWallet.
• Seek lenders that look beyond credit scores – some consider factors like education or employment history.

Most car loans are secured – the lender holds the vehicle title until you’ve fully repaid the loan. If you miss payments, they can repossess the car. Once the loan is paid off, the title transfers to your name.

Tip: APR = interest rate + lender fees. Compare APRs, not just interest rates, for true cost.

The make and model you choose can affect your rate.

• New cars often have lower rates.
• Used cars and private sales tend to have higher rates.

What you can do:

• Pick a car with good resale value and avoid unnecessary add-ons.
• Some credit unions offer the same rates for new and used cars.
• Make a down payment to lower both your loan amount and interest rate.

Loan terms generally range from 24 to 84 months.

• Longer terms = lower monthly payments but higher total interest.
• Shorter terms = higher payments but less interest overall.

Example: Based on a $35,000 loan, 9% APR, no down payment/trade-in:

What you can do:

• Limit new car loans to 60 months and used car loans to 36 months when possible.
• When comparing offers, make sure the loan terms match – a lower payment on a longer term can cost you more in interest.