![]() On average, a new car loses 9% to 11% of its original value after it leaves the dealership. Most notably, the vehicle’s value depreciates the moment you drive off the lot. Value depreciation. Your vehicle’s value depreciates over time based on factors such as mileage, condition and vehicle reliability.Since most auto loans are secured by the vehicle you’re financing, borrowers with less-than-perfect credit can still qualify. Flexible qualification requirements. Auto loan lenders offer flexible borrower qualification requirements.The auto loan would save you $228 monthly and $10,976 in interest. For a personal loan of the same amount with a 36% interest rate, you’d pay $989.44 per month and $22,493 in interest over the loan term. If you took a four-year $25,000 auto loan with a 20% interest rate, you’d pay $760.76 monthly and $11,516 in interest over the loan term. Lower interest rates. Auto loan rates generally range from 3% to 20%, which is lower than personal loan rates between 3% and 36%.Furthermore, auto loans are typically more affordable when compared to other loan types, such as credit cards or personal loans. As such, borrowers are able to manage their payments over the loan term better. Manageable payment schedules. Auto loans are a type of installment loan, which charges borrowers on a monthly basis.Pros and Cons of Auto Loansīefore deciding on an auto loan, it’s vital to understand the risks and benefits of such a loan to ensure that you make the best choice. To learn more about how Forbes Advisor rates lenders, and our editorial process, check out our Loans Rating & Review Methodology. Note that these rankings only comprise lenders that offer direct lending to consumers companies that partner with multiple lenders or offer a lending marketplace were not included. Where appropriate, we awarded partial points depending on how well a lender met each criterion. We also looked at minimum credit score requirements, maximum accepted mileages, whether each lender accepts co-signers or co-borrowers and the geographic availability of the lender.įinally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process-like online application options, mobile apps and turnaround time. Within each major category, we also considered several characteristics, including available loan amounts, repayment terms, APR ranges, applicable fees and available discounts. We chose the best lenders based on the weighting assigned to each category: We reviewed 16 popular auto loan lenders based on 16 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. PenFed does not disclose this information
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