Personal loans and auto loans

The key ideas

Compare APR

APR includes the interest rate plus certain fees, so it is the best single number for comparing loans of the same length.

Origination fees

Many personal loans deduct a fee from the amount you receive. Make sure you borrow enough to cover what you actually need.

Prequalification

Many lenders let you check your likely rate with a soft credit inquiry that doesn't affect your score.

Car loan length

Longer car loans lower the monthly payment but cost more in interest and can leave you owing more than the car is worth.

Get preapproved first

Arrive at a dealership with a preapproval from a bank or credit union, then see if the dealer can beat it. Negotiate the car price separately from the financing.

Questions to ask yourself

• What is the total cost of this loan, including interest and fees?
• Is there a prepayment penalty?
• Could I save for this instead, or buy something less expensive?

Free help

CFPB auto loan resources

Worksheets for comparing auto loans at consumerfinance.gov.

This guide is general education for US households, based on how things typically work. Rules, rates and program details change and vary by lender and state. It is not individual financial, legal or tax advice, and it isn't an offer of credit. Pennies & More isn't paid by any lender or company mentioned here.