When you begin to compare car loans, you first have to make sure that you are making equal comparisons, and that the loans are the same. If you are comparing loans of different types, then take that into account. It is fair to say that you should have a minimum of three car loans to compare before making a decision, and some experts advise you to a minimum of five so you can see what is out there.
The sources that you can look at for car loans are: your own financial institution, other financial institutions, the dealership, newspaper ads and online car loan companies. By having a wide variety of different loans, you will have a better idea of which one is going to be best for you.
When you start to compare car loans, look at the purchase price of your vehicle and the final payout price for each of the loans. This is going to be one of the most important steps of the process. Sometimes, even the best looking loans with the lowest rates can end up costing you more at the end of the loan term.
The next thing you need to check is whether or not your vehicle will be held as collateral for the loan. This means that in the event of non-payment, your car can be repossessed and sold to make up for the difference of the loan. Many financial institutions require the car to be held as collateral.
Another thing to check for when comparing car loans is the interest rate. Most often, the interest rate is fixed at a specific percentage, but in other cases, the interest rate will float and change with the prime rate. It is difficult to compare car loans when the interest rate will fluctuate.
Also make sure that you find out all of the surcharges and fees that are a part of the loan. Compare car loan fees and surcharges because they could cost you hundreds or thousands of dollars at the end of the term. Just because one rate or loan looks like it is the best, it may not be. Be sure to always check your end result.