% RATES & LOAN TERMS

Getting a car loan can seem complicated, but understanding key terms like interest rates and loan terms can make the process much clearer. At Drive Smart Auto Finance, we want to empower you with the knowledge to make the best financial decisions.

An interest rate is the cost of borrowing money from a lender. It's expressed as a percentage of the total loan amount. Think of it as the price you pay to use someone else's money. When you get a car loan, you don't just pay back the amount you borrowed; you also pay back the interest.

• Annual Percentage Rate (APR): This is the most important number to look at. The APR includes the interest rate plus any additional fees associated with the loan, such as administrative fees. It gives you a more complete picture of the total cost of borrowing. A lower APR means a cheaper loan.

The loan term is the length of time you have to repay your loan. It’s typically measured in months, such as a 36-month, 60-month, or 72-month term. This decision directly impacts your monthly payment and the total amount of interest you'll pay over time.

• Shorter Loan Terms: 
  • Pros: You'll pay less in total interest because you're paying off the loan faster. You'll also own your car sooner.
  • Cons: Your monthly payments will be higher.
  • Who it's for: People who can afford a higher monthly payment and want to save money in the long run.
• Longer Loan Terms: 
  • Pros: Your monthly payments will be lower, making them easier to fit into your budget.
  • Cons: You will pay more in total interest over the life of the loan. You'll also spend more time with a car loan payment, which could affect your ability to get other credit in the future.
  • Who it's for: People who need to keep their monthly payments as low as possible.

Interest rates and loan terms work together to determine your total cost and monthly payment.

• Lower interest rate + shorter term = The least expensive way to finance a car. You pay less each month and for the loan overall.
• Higher interest rate + longer term = The most expensive way to finance a car. You pay more each month and for the loan overall.

You can use a loan calculator to see how different interest rates and loan terms affect your monthly payments and total interest paid.

At Drive Smart Auto Finance, we can help you find a loan that balances a competitive interest rate with a term that fits your budget. We're here to help you drive smart from the very beginning.