Maine Car Loans 101

We'll explain the basics of Maine car loans here. Find out what the most important parts of a car loan are.

Annual Percentage Rate

Annual percentage rate, or APR, is probably the most important feature of your car loan. By law, this number must be disclosed in bold on your consumer loan agreement. Similarly, all lenders must calculate APR the same way, which makes it one of the most valid ways to compare Maine car loans. APR is basically a reflection of the true annual cost of borrowing. It includes the loan's interest rate as well as all fees and charges. APR is a more valid way to compare Maine car loans than interest rate alone because it takes into account the charges and fees that would otherwise be hidden. With Maine car loans, APR is most often expressed as a percentof the loan's principal. You want a loan with the lowest APR possible.

Initial Charges & Fees

Maine car loans usually require you to pay certain fees and charges up-front, such as origination, processing, and/or application fees. You should take these charges into account when comparing Maine car loans. Just itemize and total all up-front expenses for each loan to determine which one has the lowest initial fees.

Total Cost of Borrowing

This number is especially important when comparing Maine car loans because it factors in interest expense over time. The total cost of borrowing will include all monthly payments you will make over the life of the loan in addition to all fees and charges. The total cost of Maine car loans can reveal, for example, that a loan with lower monthly payments financed over a longer term will cost considerably more than a short-term loan with higher monthly payments. If you can, try to limit the terms of your Maine car loans to between 36 and 60 months. Maine car loans with longer terms will cost you considerably more in interest expense and will result in your being upside-down in the loan, meaning you will owe more on the car than it's worth.

Prepayment Information

If you want to refinance your loan or pay it off early for any other reason, you will need to know the prepayment privileges and penalties of your loan. When shopping for Maine car loans, you should ask prospective lenders whether you're allowed to pay the loan off early and, if so, what the penalties are for doing so. Some lenders limit the number of additional payments you can make per year, while others charge several months' worth of interest in prepayment penalties. If you have questions, visit our FAQ page.