 TITLE: How to Get a Car Loan CONTENT: Applying for the Car Loan\n-------------------------\nWhen you secure a car loan, the lender agrees to lend you the purchase price of the vehicle, and you agree to repay that principal with interest over a set period of months. It's important to understand that the finance company technically owns the car until you pay off the loan.\nAs you're applying for a car loan, you'll encounter some important financial terms, including:\n*   **Down payment**: This is the amount of cash you put toward the purchase price of the vehicle. The down payment lowers the amount you need to borrow, which in turn lowers the total amount of interest you'll pay over the life of the loan.\n*   **APR (annual percentage rate)**: Most types of loans come with interest, which is what the lender charges for allowing you to use their money to make a purchase. Your car loan interest rate and any fees your lender charges make up the APR. When you're comparison shopping for a car loan, comparing APRs can be a good way to assess the affordability of different loans.\n*   **Taxes and fees**: Every state charges sales tax on vehicles, plus you'll pay fees to register the vehicle. Typically, dealerships will charge a documentation fee to take care of registering the car and securing tags for you. Dealerships may also charge a destination fee from the manufacturer, which is the cost of transporting the car from the factory to the dealership.\n*   **Term**: The term is the number of months you have to pay back the loan. Common loan terms are 36 months or 72 months, with some loans exceeding 72 months. The longer the term of the loan, the more you will pay in total interest for the car. Some lenders will also offer better interest rates for shorter term lengths, such as 36 months, and provide higher rates with longer terms, up to and even beyond 72 months. For example, the interest rate for an auto loan with a term of 36 months might be 4%, whereas the same loan might be 6% for 72 months.\n*   **Monthly payment**: This is the amount you must pay every month to the lender, by an agreed-upon date, to repay the loan. It includes both principal and interest. At the beginning of the loan, your loan agreement will specify your monthly payment and how many payments you must make to fully repay the loan. One reason people take a longer loan term is to secure a lower monthly payment. Because the lender technically owns your car until you fully repay the loan, they can repossess the vehicle if you miss loan payments. END