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How to Get a Car Loan

Key Takeaways

  • A car loan makes up the difference between the car’s purchase price and the cash you pay up front.
  • You can get a car loan with a bank, credit union, AAA, online lender, or the dealership.
  • Citizens Bank doesn’t offer car loans through the branches. However, we have partnerships with a variety of dealers under the brand name CitizensOne.

Buying a car is one of the biggest purchases of your life, both literally and figuratively. And with a big purchase comes the question: How will I afford it?

Fortunately, car loans — also known as auto loans — could have you driving off in a new ride sooner than you thought. Here’s what you need to know before heading to the dealership.

What is a car loan?

A car is bound to be one of the most expensive purchases of your life, especially if it’s a new car. As a result, it’s difficult to cover the whole thing in cash. A car loan makes up the difference. That means if you buy a $30,000 car but only have $5,000 saved for the down payment, you’d apply for an auto loan for the remaining $25,000.

Where do you get a car loan?

The most common places are banks, credit unions, AAA, online lenders, and even the dealership itself. Citizens Bank does not offer car loans, but does have partnerships with a variety of dealers under the brand name Citizens One.

Still, there are other, non-traditional lending options to finance a car purchase, like a personal loan or home equity options.

What terms should you expect?

Terms vary by lender. Generally speaking, interest rates tend to be between 4% and 6%. Your interest rate will depend on your credit score, size of down payment, length of your loan, and — again — the lender.

You can choose the length of the loan that works for you. For example, your lender could offer a 24-month loan or one for 48 months. A shorter loan means two things: 1. A larger monthly payment, and 2. Less interest paid over the life of the loan. The opposite is true for longer loans.

More information

Want to finance a car purchase with Citizens Bank? Learn more about our personal loans and home equity lending options.

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