New Car Loan vs Refinance: Which is Better?

What Is a New Car Loan? A new car loan is financing you take out when you’re purchasing a vehicle—usually from a dealership, bank, credit union, or online lender. The loan covers all or part of the car’s purchase price, and you repay it over time with interest. Key Features of a New Car Loan Used to buy a new or used vehicle Typically offers lower interest rates for brand-new cars Loan terms usually range from 36 to 72 months (sometimes longer) Rates depend on your credit score, income, and market conditions Pros of a New Car Loan Access to promotional rates (0% or very low APRs from manufacturers) Predictable monthly payments from day one Ability to shop around and compare lenders before buying No existing loan complications Cons of a New Car Loan Interest costs add up over time Longer loan terms can lead to negative equity (owing more than the car is worth) New cars depreciate quickly in the first few years A new car loan is usually best when you’re buying a vehicle for the first time or replacing an old one.