Find the Best Auto Loan Companies in Richmond, VA

Types of car loans in Richmond

There are several different types of car loans. These include secured, unsecured, simple interest, precomputed interest, lease buyout, in-house financing and car refinance loans.

• Unsecured vs. secured loans: A secured loan requires collateral, which usually is the car itself. Other forms of collateral can be a home or second vehicle. An unsecured loan means your assets won’t be at risk, though it often comes with higher interest rates.
• Simple interest vs. precomputed interest loans: With a simple interest loan, borrowers can lower the interest with additional payments to the principal. The interest rate and principal on a precomputed interest rate instead are precalculated, which means borrowers are required to pay the same amount every month. If you may pay off your loan early or make larger payments than what’s due, lean toward a simple interest loan.
• Leases, refinancing and dealership financing: Lease buyouts and car refinance loans allow for buyers to pay their loans with the use of a commercial lender or secondary loan, respectively. These are ideal if the initial loan has a high monthly payment or high interest rate or if the borrower’s financial situation has changed. Some consumers choose to finance their car directly through the dealership.

Comparing auto loans in Richmond

When you’re considering a car loan, there are two key things to look for: a competitive car loan interest rate and affordable monthly payments. You may see annual percentage rate (APR) advertised instead of interest rates; APR includes interest and other fees.

Before you sign any paperwork, it’s smart to shop around for car loans in Richmond. Banks, local credit unions, poor credit specialists and refinancing companies all offer auto loans. Shorter loans help borrowers save more in the long term. While a 72- or 84-month term length will have lower monthly payments, the total cost of the loan is higher. The cost of a loan will vary depending on the type of car, the loan’s APR and the term length. You may be able to include taxes and other fees in the loan.

To understand how the interest rate can change both the monthly payment amount and the total cost of the loan, check out this example: Say you want to take out a $20,442 car loan to cover a 2017 Honda Accord. A loan with a 4% interest rate will have monthly payments of $377 for 60 months. This same loan with a 7% interest rate will have monthly payments of $405. The $28 difference in monthly cost adds up to $1,680 over the five years of the loan. Besides getting a lower interest rate, you can decrease your monthly payment by putting more money down or increasing the loan term. Getting multiple quotes and using a loan calculator ahead of time to run the numbers can provide great insight into the true cost of your car loan before you make a purchase.

Applying for a car loan in Richmond

To apply for a car loan in Richmond, you’ll need to have certain documents and information ready. This includes driver’s license, Social Security number, proof of income, proof of residence and specific vehicle information (VIN, year, mileage, make and model). Each lender’s requirements may vary slightly.

Credit score requirements differ depending on the company or lender. Check your credit report before starting applications to make sure it is accurate. If you have poor credit, it’s still possible to get a car loan, but you will pay more to borrow. Other options are to find a co-signer, save more money for a down payment or take steps to improve your credit.

Richmond auto loans FAQ

Can I get a car loan with poor credit?

Yes, you can get a car loan with poor credit. Borrowers with poor credit can work with a lender that specializes in providing loans to consumers with bad credit. Keep in mind that the loan terms will not be as favorable as they are for borrowers with good, very good or exceptional credit.

What is the average monthly car payment in Richmond?

The average monthly car payment in Virginia is $320 for a used car and $510 for a new car, according to AutoWise.

How do you qualify for a car loan?

Lenders consider your credit score, income, the cost of the vehicle and other factors when deciding whether to approve a car loan. Seek out prequalification from various lenders so you can compare rates and terms of your loan options. Don’t forget to factor in your down payment or trade-in.

Do banks give loans for private car sales?

Yes, banks do give loans for private car sales.

Is it better to finance a car through dealership or bank?

Financing a car through a dealership or bank depends on personal preference. Banks tend to provide lower interest rates than dealerships, though some dealerships offer 0% financing to qualifying customers. To save the most money, get quotes from as many lenders, including dealerships, as possible before making your decision.