It's a whole lot more exciting to shop for a new car than for a car loan. That's why it's one of the last things many car shoppers think about – when it should be one of the first. Of course, getting the right vehicle for your needs and budget is critical, but figuring out how to pay for it and getting a car loan should be tackled early in your car-buying journey.To get more auto finance news , you can visit shine news official website.

Few buyers can afford to pay cash for the full price of new- or used-car purchases. Instead, you’ll need to get an auto loan to cover either the entire cost of the vehicle or a substantial part of it. Like most parts of the car-purchase process, the COVID-19 pandemic has accelerated the adoption of hassle-free online auto loan tools. You can now easily compare lenders and apply for loans while you're on the couch binging Netflix.

When you know how much you can borrow, what interest rate you qualify to receive and how long of a loan lenders are willing to extend, you'll have a better idea of how much car you can afford. Getting the right auto loan can save you money, while getting the wrong one can cost you in several ways, including damage to your credit.

An auto loan payment is just one piece of the cost of owning a new or used vehicle – there's also fuel, maintenance, insurance and parking. Your monthly payment needs to fit into your budget, while at the same time paying down the balance as quickly as possible.

“Do your homework and make sure it’s not just about ‘hey, I want to pay $300 a month,’” says Erin Klepaski, executive director of strategic alliances at Ally Financial. “Really make sure that vehicle meets your needs – that you can insure it, that the fuel economy makes sense for you, you can drive the number of miles you need, that it has the functionality that you need, so that you get that whole package and that total cost of ownership experience, as opposed to shopping the vehicle payment.”

Our new car rankings and used car rankings will help you find the right vehicle, while the following steps will guide you through getting a great deal on your car loan.

It's common for car buyers to put off the thought of financing until they are in a car dealership’s financing office. That's unfortunately a path to paying too much for your car loan and potentially putting yourself on a path to financial calamity. Smart car buyers know precisely how much vehicle they can afford and have a plan in place to finance their new ride before they even think about heading to a dealership. You might end up with dealer-arranged financing, but if they don't have an offer to beat they’ll have no incentive to give you a more affordable deal.
1) Learn the Language of Lending
There are some essential terms that you’ll want to understand before you begin your auto financing adventure. Here are a few of the most important:

Car Loan (also auto loan, car financing): A car loan is a contract between you and a lender where they agree to provide you with the cash to buy a new or used car, and you agree to pay the money back over time. Unless you get a 0% financing deal, you'll have to pay interest each month on the loan balance. Some lenders will also charge you a loan fee.

Interest (also Finance Charge): Interest is the cost of borrowing the money from the lender. It is expressed as an interest rate (often called the annual percentage rate or APR). The interest covers the lender’s costs and risks while providing them with a profit margin. A loan's interest rate will be specified in the loan papers.

Interest rates fluctuate over time. For several years, auto loan rates were near historic lows. They are now slowly climbing toward a more historically normal range. The annual percentage rate you'll pay is affected by a multitude of factors, including some you can control and many you can't. Your personal credit history, the length of the loan that you're seeking and even the type of vehicle that you're buying can significantly affect the rate you'll be asked to pay. Different lenders can offer significantly different interest rates for the same vehicle purchase.

Car Loan Term: The loan term is the length of the auto loan, and it’s typically expressed as a number of months. Loan terms of 36 to 48 months were once the most common lengths. As cars have gotten more expensive, however, loans with terms of 60 to 72 months or even longer are widely available. It’s a good idea to divide the loan term by 12 to see the number of years that it will take to pay off the vehicle.

Longer loans mean more risk for lenders, so they typically come with higher interest rates. You generally want to get the shortest loan you can afford. Having a shorter loan helps you to avoid the possibility that you’ll still be trying to pay off your car at the same time as the car’s age leads to ever-more costly repairs. You don’t want to be faced with the choice of paying for repairs or having the money to make your monthly car payment.

Principal: The loan principal is the balance of the loan. When you first take out the financing, it will be the total loan amount. As you make monthly payments, the principal will decline. With each payment, a portion will go toward interest and the rest will pay down the principal.

Down Payment: A down payment is an amount of money that you pay toward the purchase of the car when you initially buy it. It can come in the form of a cash payment, your trade-in or both. The amount you’ll have to finance is the difference between the price of the car and the amount of the down payment. For example, if you buy a $40,000 minivan and pay a $10,000 down payment, you’ll have to finance $30,000.