by Emily Hechler 
Finding the perfect car takes time and effort. If you’re like me, the cost of your desired car likely influenced your decision to want to buy it. Car salespeople can be pushy and persuade you to make unnecessary purchases that can range from different features to warranties and everything in between. Before you head to the dealership, it’s important to make sure you understand some key terms related to the car you want to buy and how to finance your auto loan.
First, let’s discuss cars shopping terminology. A car’s make and model note the manufacturer that produced the car and the specific name of the car. A Chevrolet Equinox has a Chevrolet make and an Equinox model. A model year notes the year that the car had changes made to some standard features. The newest car models typically come out in the year prior to the name. For example, the 2025 Toyota Camry became available for consumers to buy in the spring of 2024.
The MSRP found on a window sticker of the car or on the online listing stands for manufacturer’s suggested retail price. This is how much the company (Ford, Honda, Acura, etc.) wants to sell the car for. This number is the same across dealerships.
The MSRP of a car changes based on the trim level. The higher the trim level, the higher the MSRP. The trim level is a term used to define what features and equipment come with that car. There can be several different trim levels for the same kind of car. A Hyundai Elantra SE includes remote keyless entry, dual USB charging ports, and Bluetooth capabilities, while a Hyundai Elantra SEL includes these features plus a hands-free smart trunk, ambient interior lighting, and voice recognition.
A great third-party opinion to consider is Kelley Blue Book. This company determines what they believe a car is worth by giving it a Blue Book Value. This can help you determine how to negotiate the price of a car, or if the car you want to buy is worth the price.
When you buy a new car, they will come with a factory warranty. This warranty is automatically given by the manufacturer and covers the car up to a specific mileage or age. Factory warranties vary from model to model. You can also buy an extended warranty from Alltru or the manufacturer to prolong your coverage.
There are many other helpful terms to know, but these are few are crucial. Visit Understanding Car Shopping Lingo for a list of 25 terms you should know.
Financing a car can be intimidating, but it doesn’t have to be. Whether you have decided which car to purchase yet or not, there are some facts you’ll want to know.
When you go to purchase your car, you’ll likely make a down payment. This is a percentage of the sale price of the car that you will pay before you leave the lot. A good rule to follow is to make a 20% down payment for a new car and a 10% down payment for a used car. Whatever amount your down payment doesn’t pay for will need to be the amount you need to borrow through a loan.
There are two loan options, auto loans and personal loans. The first major difference between the two is that an auto loan is a secured loan, and a personal loan is an unsecured loan. This means that an auto loan requires collateral, and a personal loan does not. In this situation, the car is the collateral. This means that if you stop making your monthly auto loan payments, your lender can take the car from you. However, this cannot be enforced with a personal loan.
A second major difference is that a personal loan actually doesn’t require a down payment! If you don’t have any money to immediately pay toward a car, you can use a personal loan instead.
However, the downside to a personal loan is that your monthly payments will be higher since your loan amount is larger. In addition, personal loans tend to have higher interest rates because there is no collateral. It’s riskier for a financial institution to grant a personal loan than an auto loan. This comes at the cost of higher interest.
Another difference between the loan term lengths can greatly vary. At Alltru, our auto loan term lengths range from 36 to 84 months, but our personal loan term lengths don’t exceed 60 months. If you want to pay off your vehicle in a shorter amount of time, a personal loan could be the solution.
Auto loans also have limitations on the age and mileage of the car. If you want to buy an older car, a personal loan could be easier to get approved. However, if the car you want to buy has already been used for several years, it might not be worth the cost of taking out a loan to pay for it.
While you don’t have to apply for car loans every day, our team at Alltru processes loans every day. Our auto loan application process is simple and fast, so you can get ready to purchase a car quickly.
Whether you have decided which car to purchase or not, you can apply for an auto loan from Alltru to get preapproval. This will expedite your experience even more.
To start, visit our Calculate a Vehicle Payment Calculator. In this tool, you can add the vehicle purchase price, cash rebate or cash back (if this is included in your purchase), and sales tax rate. Here you can also add your trade-in information and loan information.
Even if you don’t know which car you want to buy, you can use this tool to get an estimate for how large of a loan you will need and to estimate your monthly payments.
If you are comfortable with your expected loan balance, start your application with Alltru.
When you fill out your application online or at a branch, you’ll answer some questions about your finances and the car you want to buy.
Usually, if you have a higher credit score, you will have a lower APR or annual percentage rate – which is your interest rate. A higher interest rate means that you are paying more monthly for your loan than if you had a lower interest rate.
If this is concerning, there are a few ways you can counter this situation. The fastest option is to add a co-signer. A co-signer is another person who will sign your auto loan with you. A good co-signer has a higher credit score. Because of their higher credit score, you can score a lower APR. Since a co-signer is contractually agreeing to the loan, their credit score and finances will be at stake if you do not make your payments on time.
There are other alternatives you can follow to improve your credit instead of using a co-signer. First, make sure to pay your current bills and loan payments on time. Every time you make a late payment or don’t pay at all for a month, this decreases your credit score. Automatic payments and reminders in your Alltru app can make this easy. Another method is to increase your credit limit. The catch is that you do not want to bury yourself in more debt. You can ask your financial institution to increase the amount you can put on your credit card and then not increase your balance through more shopping. This shows the institution that they can trust you with a larger limit.
After you submit your auto loan application, we’ll work to preapprove it. This is usually done within one business day. Once your application is preapproved, you can head to the dealership to secure which car you will buy. Having preapproval can help you negotiate the MSRP to a lower amount. It can also help give you a better interest rate if you decide to finance through the dealership instead.
If you decide to stick with a loan from Alltru, you’ll send us your purchase agreement and we’ll finalize the loan documents.
Congratulations! You’re ready to finance your next car!
Finding the perfect car to buy can take time, but financing it doesn’t have to. Now that you have a better understanding of how to finance a car, you can confidently continue your car shopping, whether you’ve found the one you want yet or not. When you’re ready, we’ll be here to help you get those keys in your hands.
