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What is an APR on a car loan?
I’m in the process of purchasing a new car, and I’ve been comparing loan offers from various lenders to see which has the best rate. I noticed sometimes I’ll see the APR listed and other times just the interest. What is the APR on a car loan, and how does it differ from the interest rate?
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Comparing
car loan
offers from multiple lenders is a great way to ensure you find the best rate, so you’re off to a good start!A loan’s annual percentage rate, or APR, is the cost you pay annually to borrow money. Unlike the interest rate, the APR on a car loan includes interest and other fees. So overall, the APR is a broader way to measure the cost of borrowing money.
Lenders are legally obligated to provide the APR of a loan. You can use the APR to compare offers and get a better sense of the cost, but make sure to only compare APR to APR—not APR to interest rate—because the APR is typically higher than the interest rate.
Additionally, when comparing loan offers to find the best rate, don’t forget to submit applications to:
- National and local banks
- Credit unions
- Dealerships
- Online lenders
Finally, once you have secured your loan, don’t forget that you’ll need a full coverage
car insurance
policy with comprehensive
and collision
coverage prior to driving your new car off the lot.Full coverage can get a bit pricey, but you can get the best rate by using
Jerry
. Jerry is an insurance comparison app that will collect quotes from more than 50 top insurance companies, like Travelers, Nationwide, and Progressive, in seconds. After making a selection, Jerry will handle the phone calls, paperwork, and renewals for your top pick so that you don’t have to. They even help cancel your old policy!View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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