Before you take the keys, know what you are buying.

What makes for the best auto loan? There’s no shortage of auto loan providers out there, from the big banks to local credit unions to alternative financing companies. How do you know you are getting the best deal? Here is how to evaluate each auto loan quote and find the best one.

Monthly Payment

The most basic standard, of course, is whether the monthly payment fits into your budget. Keep in mind that some loans may be negotiable on this point. However, if a monthly payment is simply unaffordable for you, no matter how you work the numbers, set that quote aside.

Interest Rate

Each auto loan is made of three important parts: the principal, the term, and the interest rate. Think of the interest rate as the price you pay to borrow the money. Obviously, the lower the interest rate, the better, at least in theory, but that is not a hard and fast rule. Still, you can look at interest rates and quickly rule out several quotes with ease.

Principal

The principal is essentially how much you are allowed to borrow. Different lenders can have wildly different standards about how much you can borrow, and you will want some room to cover fees and other costs involved in securing a car. These quotes, in general, will be a useful guide to what you can borrow, overall, and if you see quotes that pop out of the pack, you should examine them very closely before taking them.

How much will that key cost you?

Term

The term is how many payments you will make, usually written in months. So, for example, if your car will be paid off in three years, it would be a 36-month term. Longer terms can mean, for example, lower monthly payments. But beware, as that also means you will pay more interest for longer. The savings you have in the short term might be wiped out by the extra payments in the long term. Ideally, you will get the shortest term possible that you can afford.

Overall Cost

For any quote, sit down and calculate the overall cost. There are plenty of calculators online that will let you punch in all the data on a quote and offer up the overall cost across the life of the loan. It is important to measure this against depreciation, or how much your car will drop in value over time. For example, if you are buying a used car that is five years old, on a five-year term, you will have a ten-year-old car at the end of the process. What do you estimate that car will be worth as a trade-in?

That needs to be a factor. You are, after all, buying a car, and when the last payment is sent out, you will own it free and clear. But that means you are responsible for it, and if you want a new one, you will have to consider that cost.

Car loans can be complicated, but with a little research and a few quotes, you can easily find the car that is right for you. So, take a little time, and read the research from CarFoundMe. It will help you find not just the best loan, but the best car.