How to Compare Car Loans

When you get quotes on our site, you will need to compare up to five different poor credit car loans. Here are some tips on how to compare car loans effectively.

APR (Annual Percentage Rate)

The APR is the best representation of the total cost of borrowing poor credit car loans. By law, this number must be displayed in bold on your consumer loan agreement. This number will reflect the interest rate on the loan plus all charges and fees. The APR will represent your true annual cost of borrowing. As a general rule when comparing poor credit car loans, the lower the APR, the better. The APR is a much more valid way to compare poor credit car loans than interest rate alone, as the interest rate fails to account for the charges and fees that accompany the loan.

Up-Front Charges & Fees

All poor credit car loans will come with certain up-front charges and fees. Some lenders might refer to these expenses as origination fees or processing fees. When comparing poor credit car loans, itemize these fees, total them, and then try to choose loans with the lowest total up-front charges.

Loan's Total Cost

The total cost of poor credit car loans takes into account all the monthly payments you will make plus any charges and fees. Always look at total cost as opposed to monthly payments when comparing poor credit car loans because it will capture your total interest expense over time as well as the cost of fees and charges. If possible, you should try to avoid poor credit car loans with excessively long terms. Ideally, you want to look for poor credit car loans with terms between 36-month and 60-month terms. The shorter the term on poor credit car loans, the better because your total interest expense over time will be considerably less.

Prepayment/Early Discharge Information

If you ever decide to refinance poor credit car loans, you want to make sure you know your prepayment privileges and any accompanying penalties. Some lenders will charge you a penalty for premature payment on your loan. Find out if you can pay your loan off early, how many extra payments you are limited to per year (if any), and what your prepayment penalty will be. You want to choose poor credit car loans with no or little prepayment penalties. If you have any questions, please visit our FAQ page.