Editor's choice: Carvana
- Most credit types welcome
- 45-day preapproval
- Seven-day guarantee
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Buying a brand new car is exciting. But deciding what you buy and how much you’re going to spend takes time. Budget out the cost and compare lenders to get the best deal.
New car loans are typically secured term loans backed by your new vehicle. Generally, you can borrow between 80% and 100% of your vehicle’s value and cover the rest of the cost up front.
Once you get your funds either through a dealership or third-party lender, you pay it back plus interest and fees in monthly installments. Usually, it takes between two and five years to pay off a car loan. If you fall behind on your payments, your lender can repossess your vehicle.
New car loans don’t have to be for brand-new cars — the majority of lenders accept a vehicle up to two years old from a dealer or private sale as well.
Anything below 5% is considered a good interest rate on a new car loan. However, you won’t be able to qualify for a good rate on a car loan unless you have good to excellent credit.
Here are some factors to consider when comparing loans for a new car:
New car loans typically come with lower rates than used car loans since a newer vehicle will be worth more to a lender should you default. You typically have a larger selection of lenders to choose from as well.
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