As the name suggests, new auto loans are those you can use to finance a new car directly from the manufacturer or dealership. These loans allow you to own a vehicle at interest rates that are usually lower than those of traditional loans. They can be a great option if you’re trying to keep your monthly payments down. 

Most banks and lending institutions require you to have excellent credit and FICO scores to qualify. Another advantage of getting a new auto loan is that your interest rate will be fixed. Therefore, you won’t be met with unplanned interest rate increments. 

The only drawback with these loans is that you may end up paying them for a long time. This might hurt your pockets, considering how fast cars depreciate. So, if you like updating your vehicles, you may want to think twice before going for a new auto loan. 

If you need to buy a used car from a manufacturer or dealership but don’t have enough cash, you could consider financing it with a used car loan. Since used cars cost less than new cars, the loan amount for the former might be lower. However, many lenders charge high interest rates for these auto loans due to the high risks associated with pre-owned cars. 

To get the best out of used auto loans, ensure you buy your vehicle from a certified dealer. This will cushion your investment from unpredictable problems. Additionally, if you plan to resell your used car after a certain period of time, look for auto loans with longer terms. They tend to have fairly affordable monthly payments. 

If you already have an auto loan, refinancing may be a way to get a lower interest rate or reduce your monthly payment. During auto loan refinancing, you take a new loan and use the amount to pay off your initial car loan. Sometimes, it’s necessary, especially if you are upside down on your vehicle (owe more than its worth).

However, if you have equity in your car, refinancing may not be for you. You can find out if auto loan refinancing makes sense by comparing your annual percentage rate (APR) with available rates offered by auto lending institutions. 

Lease buyout loans can be a great option if you have leased your car but still wish to pay it off early. This loan has a small application fee and an interest rate that’s slightly higher than other types of auto loans. 

However, if you pay off your lease early, you can save yourself thousands in total interest payments over your remaining lease period. But before paying off your lease, it’s important to find out if your lender will charge any type of early termination fee.