Source: Business Insider1
An auto loan is a loan given to purchase an automobile. If you aren't able to pay the loan back, the lender could repossess (take back) the car. This can make it possible to purchase a vehicle that you need to drive to get to work, or afford a nicer vehicle you could not otherwise. Most auto loans will give you 2 to 7 years to pay it back, and have interest rates that vary significantly. In general, these loans are not as expensive as higher interest debt like credit cards, and can often have reasonable rates.
What interest rate your auto loan will be depends greatly on your credit score, among other factors. The average APR for a new car was 5.61%. Try some different values to get a sense of how much an auto loan could cost you.
$
Years
%
Enter a value from 3.65 to 14.39
| Monthly Payment | $383.04 |
| Total Paid in Interest | $2,982.37 |
| Total Cost to You | $22,982.37 |