Shopping for a new car can be both stressful and exciting as you steer closer to buying your dream vehicle. A good way to ease this process is knowing how much you’re going to pay if you need a loan to purchase a car. Locking in a good annual percentage rate (APR) will save you money on the life of your loan and potentially get you more car for your money.
What is an APR?
Every auto loan has an APR, which is the annual cost you’re charged by the lender for borrowing money. It’s slightly higher than the base interest rate the loan carries because it includes fees for servicing the loan—like documentation of the title and taxes, dealer prep and other fees associated with the transaction.
The higher the APR, the more you will pay back to the lender over the life of the loan. This is why it’s important to shop around for the loan.