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Consumers may consider a 144-month auto loan to finance the purchase of classic and exotic cars. Such vehicles could carry a sales price above $100,000. Auto loans with 12-year terms may make it easier for consumers to buy ultra-luxury brands like Aston Martin, Ferrari, and Lamborghini.

Buying a six-figure car is a personal choice, and getting a 144-month auto loan to finance that car might make sense for some borrowers. Car loans can have repayment terms as low as 12 months and as high as 180 months or 15 years.

However, longer terms may include higher interest charges and lower monthly payments compared with shorter terms. For example, getting $100,000 in auto loan financing at 6% interest would cost $975.85 monthly under a 12-year term and $1,657.29 under a six-year term.

It might make more sense to get a shorter term if you can afford a higher monthly payment.

That’s because consumers with 12-year auto loan terms may end up paying tens of thousands of dollars in interest over the life of the loan. Below, we highlight some of the pros and cons of getting a 144-month car loan.

Getting a 144-Month Auto Loan to Buy Your Car

Getting a 144-month auto loan to buy your car could be an option if you’re looking to own a classic or exotic car brand. Lenders may offer 144-month auto loans to finance ultra-luxury vehicles with retail prices above $100,000.

As mentioned earlier, getting $100,000 in auto loan financing at 6% interest would cost $975.85 monthly under a 12-year term and $1,657.29 under a six-year term. If you need $100,000 in car loan financing and cannot afford monthly payments above $1,000, the 144-month auto loan might be right for you.

Lenders generally charge interest when financing six-figure vehicles. If you need $100,000 in car loan financing and could afford monthly payments up to $2,000, a shorter term might serve you better. Loans with shorter repayment terms usually have lower interest costs than loans with longer repayment terms.

Paying interest over the life of a loan can add up. If you get a $100,000 car loan with a 6% interest rate and 12-year term, you may pay $40,522.43 in total interest over 144 months. You may pay $19,324.79 in total interest over six years if you get similar financing on a 72-month loan term.

When to Consider a 144-Month Loan

You may consider a 144-month car loan at any time, particularly if you’re interested in buying a six-figure car. The way car loans work is that lenders give borrowers financing in order to buy a motor vehicle.

Here are some factors to consider:

•   Car loans with 12-year terms are scarce, but private lenders may offer them when financing classic or exotic vehicles.

•   Getting a 144-month loan to finance a high-mileage used car could be difficult, although some lenders may be willing to finance such vehicles.

•   A private party auto loan can provide you with financing to buy a new or used vehicle from a private person selling a car.

•   Lenders may have general car loan requirements that ask borrowers to provide proof of income and proof of identity when applying for financing.

Can I Get Financing for an Exotic Car for 144 Months?

Yes, creditworthy borrowers may be able to get financing for an exotic car for 144 months. Some lenders even offer 180-month car loans to help consumers purchase vehicles worth $200,000. You may need a steady income, a base FICO® Score above 700, and an established credit history to qualify.

Can I Get a 144-Month Auto Loan on a 10-Year-Old Car?

Creditworthy borrowers can get a 144-month auto loan on a qualifying 10-year-old car. Some lenders may require the vehicle to be a 10-year-old Aston Martin, Bentley, Bugatti, Ferrari, Lamborghini, Lotus, Maserati, McLaren, or Rolls-Royce.

Getting a 12-year car loan on a 10-year-old economy car can be difficult but not impossible. Economy cars are generally small vehicles with more affordable price tags than luxury or premium vehicles.

144-Month Car Loan: Pros & Cons

The table below highlights some of the pros and cons of 144-month car loans:

Pros of a 144-Month Auto Loan

Some of the pros of a 144-month auto loan:

Investment

A 144-month auto loan can help consumers buy exotic vehicles as an investment. Exotic vehicles may appreciate greatly in value over time, according to Bugatti. This means owning an exotic vehicle may help you build wealth, which can partially or fully offset the cost of a 144-month loan.

Cost

Even if you can afford to buy an exotic car without borrowing money, paying that cost up front can deplete your savings. A 144-month auto loan would spread that cost over 12 years. Minimizing your upfront costs may preserve your savings or allow you to invest your savings elsewhere.

Affordability

A 144-month auto loan can promote affordability in the exotic car industry. The monthly payment on a 144-month auto loan would be substantially lower than buying the same vehicle on a 72-month repayment schedule.

Cons of a 144-Month Auto Loan

Here are some of the cons of a 144-month auto loan:

Lack of Options

Obtaining a 144-month auto loan may require purchasing a classic or exotic vehicle with a sales price of $100,000 or more. Such restrictions can leave you with a clear lack of options, particularly because exotic cars represent a small niche of the overall auto industry.

Depreciation

An economy car financed by a 144-month auto loan could potentially depreciate over the 12-year repayment period. Some lenders may offer 144-month car loans on non-exotic vehicles, and those vehicles historically experience significant depreciation over time.

144-Month Auto Loan Credit Unions

Some credit unions may offer 144-month auto loans on new and used vehicles. Some of these credit unions may finance economy vehicles under $40,000.

144-Month Auto Loan Lenders

Lenders of 144-month auto loans can include credit unions and private finance companies. Some of these lenders may specialize in the financing of classic and exotic vehicles.

Lenders may offer secured and unsecured auto loans. A secured car loan uses the financed vehicle as collateral, whereas an unsecured car loan has no collateral requirement. Lenders may repossess your vehicle if you default on a secured auto loan.

Recommended: Refinance Commerical Auto Loan

Alternatives to a 144-Month Auto Loan

Here are some alternatives to a 144-month auto loan:

Buying the Car With Cash

Instead of borrowing funds from a lender, buying the car with cash is an option for consumers who have sufficient money in the bank. One of the advantages of purchasing the car outright is that it gives you 100% equity in the vehicle and the certificate of title.

Refinancing the Car

If you already have a 12-year auto loan, you may qualify for auto loan refinancing. Refinancing pays off the original loan agreement and replaces it with new loan terms. Borrowers can refinance auto loans almost immediately.

Here are some auto refinance factors to consider:

•   In terms of when to refinance a car loan, the right time for you to refinance may be whenever you can secure a lower interest rate or whenever you need a lower monthly payment

•   The pros and cons of refinancing a car are something you may consider when evaluating whether to seek an auto refinance loan

•   The cost to refinance a car may include several fees that can be a dealbreaker for some consumers

•   Refinancing can help borrowers get a lower interest rate, but refinancing may also cause a borrower’s credit score to dip from a hard pull credit check

The Takeaway

Getting a 144-month auto loan has certain advantages and disadvantages. The 12-year repayment schedule may feature an affordable monthly payment, but borrowers may also pay high interest costs over the life of the loan.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

Can you finance a car for 144 months?

Yes, you can finance a car for 144 months if you meet the lender’s minimum eligibility requirements. These lenders may require that you have steady income and strong credit. Some lenders may require the financed vehicle to be a classic or exotic car.

Does refinancing your car loan for 144 months make it cheaper?

Refinancing your car loan for 144 months could potentially replace your existing loan agreement with a more expensive loan product. Refinancing may generally offer you a lower monthly payment but could also increase your burden of debt in some cases. Refinancing for a lower monthly payment in some situations may cause you to pay more cumulative interest over the life of the refinanced loan term.

Should you use a 144-month auto loan to refinance your car?

Replacing your existing car loan with a 144-month auto refinance loan might not be right for you if you can afford higher monthly payments. Loans with longer terms may carry higher interest rates and lower monthly repayments compared with loans that have shorter terms.

Photo credit: iStock/Georgijevic

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SOALR-Q225-010

Even if you have been prequalified or preapproved for a car loan, you haven’t yet crossed the finish line to receive your funds. Lenders check your application and credit and delve into other details as they move toward finalizing a car loan.

Fortunately, getting a loan deal is possible very soon after you apply. You’ll not only need to come prepared, but you’ll want to know what a good rate looks like and whether you’ll actually get the rates as they’re advertised.

When Are Car Loans Finalized?

“How long does it take to get an auto loan?” People wonder. The answer is, car loans are finalized once the loan process has been completed.

•   When your initial application is sent to a lender, you begin the process of qualifying for an auto loan. If you settle on an offer they preapprove you for, then you still have to wait for them to close the deal.

•   When you are getting a car loan, the term “finalized” means the lender has reviewed your documents, re-pulled your credit, and made sure nothing changed in your credit history (such as applying for a credit card) since the preapproval was initially gained. During this process, the lender can keep the initial deal on the table, change the conditions of the loan, or deny the loan.

•   Once a car loan has been finalized, it can officially move ahead to the disbursement of funds.

•   After taking the loan, consider the process of refinancing a car loan to lower your APR (annual percentage rate). You might want to wait 60 to 90 days from the original loan to allow the vehicle title to transfer or even longer to build your credit score for a chance at better rates.

Recommended: Calculate APR of Car Loan

How Long Does It Take to Finalize a Car Loan?

Typically, it takes a few days to finalize car loan financing. In some cases, it can happen in just a few seconds. Nevertheless, precisely how long it takes to finance a car varies among lenders.

In general, dealerships tend to finalize car loans quicker than online lenders, while banks and credit unions are known to take the longest. Purchasing a car through a private seller as opposed to a dealership may also extend the time it takes to finalize the loan. The difference in timing could range from less than an hour at, say, a dealer eager to make a deal, to a week or more when working with a local financial institution.

Remember that a faster process isn’t always better for your wallet. For example, dealerships are known to charge higher auto loan interest rates than banks and credit unions, and those with better credit scores tend to get better interest rates.

In the third quarter of 2024, auto loan statistics showed that borrowers with superprime credit scores had an average APR of 5.08% on a new car, and those with deep subprime credit scores had an average interest rate of 15.43% on a new car. That said, though, there’s more to know about car loans before you accept a finalized deal.

Recommended: How to Sell a Car You Still Have a Loan On

Car Loan Underwriting Process

Some lenders will conduct an underwriting process in order to approve it for financing. The time frame it takes auto loan underwriters to review and approve a car loan depends on who you choose to apply with, the amount you need, and your creditworthiness. To help you understand how long this process could take, here’s an overview of the stages of your loan.

•   Submit the application: The first thing that needs to happen is for an application to be submitted. You can complete it online or in person, and it usually takes 10 to 15 minutes to complete if you have all of the required documents.

•   Preapproval response: Some lenders respond immediately with a preapproved deal for an auto loan, while others need a few days to get back to you. Aim to get qualified with multiple lenders to compare rates, and do it within a 14-day period to minimize the impact on your credit. Although preapproval requires a hard pull of credit, having multiple lenders request your credit in a short time frame will only count as one pull since it’s recognized that you are rate-shopping.

•   Full approval: The approval process varies in length of time. Many lenders will approve the loan on the same day, depending on what time of day it is when you applied. Some lenders may require a few days for processing.

•   Loan funding: Once you’ve received full approval from a lender, you will typically get your funds within one to three business days, though it’s a good idea to check with your lender.

What Can Slow Down the Application Process

If you want to speed up the application process, make sure you avoid these bottlenecks.

•   Not submitting all required documents: Every loan application is unique. You’ll likely need two valid forms of identification, proof of income documentation, and your Social Security number. Check with your lender to see their exact requirements.

•   Applying late in the day: Some lenders offer same-day approval, but processing could be delayed if you apply outside of business hours or on a weekend.

•   Not meeting vehicle requirements: Lenders often have specific requirements for both used and new cars to be considered eligible for financing. They need to know things like mileage, model, and year to be able to consider you for a loan.

Can a Finalized Car Loan Get Denied?

There are certain reasons why a car loan that was previously approved could get denied. Car loans most often get denied when lenders take a second look at you and your credit. Here are some factors that generally influence their decision:

•   FICO® Score: The most common reason finalized car loans get denied is due to some facet of the applicant’s credit score. The lender may have added “with approved credit” to an offer, which means that they’ve reconsidered the offer due to something they found in an applicant’s credit report.

•   History of bankruptcy: Generally, people get denied due to a bankruptcy that occurred less than two years before filing for the auto loan. In terms of getting approved for a car loan after bankruptcy, including the Chapter 7 and Chapter 13 bankruptcy exemptions, you may have to pay higher interest rates to get a loan.

•   Payment-to-income ratio: A payment-to-income ratio is the monthly car payment divided by the monthly income of an applicant. Payment-to-income is an important factor for lenders, but they could make an exception if other areas of the application are deemed favorable.

•   Debt-to-income ratio: A debt-to-income ratio is the amount of monthly bills on the buyer’s credit bureau divided by gross monthly income before tax. If an applicant can’t pay his monthly bills in addition to the proposed car loan, underwriters aren’t going to approve the loan.

If your car loan got denied (meaning you weren’t offered funding, even a higher-than-expected interest rate), you may still have options. You might benefit from looking for a loan from a different bank, credit union, online lender, or dealership. On the bright side, it could be an opportunity to find competitive rates.

If you aren’t having much luck getting approved, consider some workarounds.

•   Your bank may allow you to add a cosigner. If this person has a positive credit profile, they could help you get approved. However, they will also be responsible for the loan’s repayment, so make sure you can honor your debt.

•   Another alternative is to delay a purchase and build your credit using methods like secured credit cards.

•   You might also see if a trusted friend or family member is willing to provide you a loan to help you snag a car.

Recommended: Which Credit Score Is Used?

The Takeaway

A car loan is typically finalized in anywhere from minutes to a week or more, depending on your specific situation and your lender. It’s important to know that the preapproval offer you get from a lender isn’t final until the lender says the loan is finalized and they can move ahead and disburse the funds. Be aware that lenders can change their minds, meaning the conditions of the final offer might look different than what was proposed during preapproval. It’s wise to shop around and know your options.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

How long does it take to get a car loan?

The time frame of finalizing a car loan can vary from minutes to a week or more, depending on the lender you choose, the amount you need, and your credit score. You can speed up the process by making sure you have all of the correct documentation, filing for the loan early and on a business day, and by checking your eligibility for the car loan online.

What is the process to finalize a car loan?

After you’ve submitted your application and accepted the preapproval offer, underwriters take a closer look at your application and credit to finalize the car loan. Depending on the situation, you might get a finalized car loan as soon as the same day you applied or it could take a week or longer.

What are the reasons that a car loan is not finalized?

Factors typically involved in the underwriting process include specifications of the car, the down payment, your FICO score, income, debt, employment, and other information. If something doesn’t meet the lender’s expectations, they could deny an applicant’s finalized car loan.

Photo credit: iStock/Brenda Sangi Arruda

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOALR-Q225-008

A cosigner may become the primary borrower on a car loan through reaching an agreement with the lender or refinancing the car loan. However, it can become a complicated matter.

Typically, a cosigner has been added to a car loan application to improve the odds of approval, thanks to, say, a favorable credit score. However, the cosigner doesn’t usually have ownership of the vehicle that the loan is funding.

Below, learn more about how a cosigner may become the primary borrower on a car loan.

What Is an Auto Loan Cosigner?

An auto loan cosigner is an individual — usually a friend, partner, or family member — who cosigns a primary borrower’s auto loan contract. A creditworthy cosigner can help a primary borrower get approved for auto loan financing. The cosigner doesn’t have ownership of the vehicle but agrees to accept financial liability if the primary borrower falls behind on loan payments.

Why would a primary borrower seek a cosigner? A primary borrower with bad credit may need a creditworthy cosigner to get approved for a car loan. Or a primary borrower with good credit may need a cosigner with excellent credit to qualify for a lender’s lowest annual percentage rate (APR).

If you have bad credit, no credit, or fair credit, a creditworthy cosigner may help you get approved for car loan financing. The cosigner is legally responsible for meeting the financial obligation of the loan if the primary borrower doesn’t make the payments. If payments are made late or the primary borrower defaults on the loan, this can damage the credit scores of both parties.

If you are more than 30 days past due or delinquent on your car loan payment, lenders may report the delinquency to all three major credit bureaus.

Ways a Cosigner Can Become the Primary Borrower

As a cosigner, you’re financially guaranteeing that the loan payments will be met on time and in full. If the primary borrower wants to explore how you, as cosigner, may become the primary person on the loan, talk to your current lender. This may involve refinancing the car loan. More information about refinancing is found below.

Recommended: What Should Your Average Car Payment Be?

Can a Cosigner Take Possession of the Car?

If you have the car, you may be wondering: Can a cosigner take my car? If the primary borrower isn’t keeping up with loan payments, the cosigner cannot take possession of the auto. While a cosigner has a financial obligation to the lender, they have no legal ownership or right to take possession of the car, unless they were specifically added to the car. In other words, a cosigner is typically on the vehicle’s note (making them liable for the payments) but not the car title (which indicates ownership).

Therefore, you can’t repossess the car from a primary borrower who isn’t paying their debt. (However, if you were a co-borrower, it’s possible that you could jointly own the vehicle with the other borrower.)

Can a Cosigner Sue the Primary Borrower for the Entire Amount of a Loan?

One option that’s available: A cosigner does have the right to sue the primary borrower to recover the funds spent making loan payments. It will then be up to the court to decide whether to award any damages to the cosigner. If you’re considering whether to sue, take court costs and the fee of hiring a lawyer into account.

Recommended: What Happens to a Car Loan When Someone Dies?

What Happens When a Cosigner Sues the Primary Borrower?

As a cosigner, you may decide to file a lawsuit to recover the funds you paid toward the car loan. If you had the primary borrower sign a separate agreement where he or she agreed to meet the payments, your lawsuit could potentially also have a focus on breach of contract.

Plus, if the lender sues you, then you can file a suit against the primary borrower to claim that they, not you, should satisfy the lender’s payment requirements. But all this requires time, energy, and probably money. There aren’t guarantees that you’d win. If you lose, you could face owing legal expenses and the loan’s remaining debt and fees.

The Rights of the Primary Borrower on a Car Loan

The primary borrower has the ownership rights to the vehicle. The cosigner does not, unless they were specifically added to the title. This is the case whether the borrower bought the car from a dealership or from a private seller using a private party auto loan.

The Rights of the Cosigner

When cosigning a loan, the person is taking on responsibilities rather than rights. The cosigner is responsible for making payments if the primary borrower doesn’t, and this doesn’t give the cosigner rights to the vehicle. As noted above, cosigners do have the ability to sue the primary borrower, and the court will decide the outcome.

Can a Cosigner Be Removed from a Car Loan?

It’s possible to remove a cosigner from an auto loan. One of the simplest ways to proceed is to ask the lender whether the loan comes with a cosigner removal option that can be exercised when the primary borrower can qualify for the loan by themselves or other conditions have been met.

If this is a possibility, the lender may require the cosigner to sign a release form. If the relationship between the primary borrower and cosigner is a good one, this may be a simple process. After all, being taken off a loan can help the cosigner because they would no longer be responsible for the car payment. If it’s part of a contentious divorce or other situation where the relationship between the two parties is now poor, this process may be more complicated.

Ending a Cosigned Car Loan

Other ways exist to end the existence of a cosigned car loan. Here are the most typical:

•   Pay off the loan

•   Refinance

•   Voluntary surrender

•   Sell the car

Here’s more information on each option:

Pay Off the Loan

If the cosigner is financially able and willing to help the primary borrower make payments, then this can be the most straightforward approach. Once that debt is paid off (either through regular payments or in a lump sum), then the cosigning situation automatically ends.

Refinance

If the primary borrower successfully goes through the auto refinance process on their own merits, then the cosigned loan would be replaced with the new one. This is one of the more typical ways to remove a cosigner from a vehicle loan.

Recommended: Pros and Cons of Car Refinancing

Voluntary Surrender

If the primary borrower can’t make payments, the lender has the option to repossess the vehicle. This can come with plenty of costs and, if the primary borrower can’t pay, the lender can come after the cosigner. Willingly giving up the vehicle can save time, money, and hassle.

Sell the Car

If the primary borrower struggles to make payments and refinancing is not a viable option, then selling the vehicle can be worth considering. The borrower could sell the car, pay off the cosigned loan, and use whatever is left to purchase a more affordable vehicle.

Auto Refinancing Options

If you’re considering the auto refinance process and its typical timeline, here’s more about how auto refinancing works. Steps include:

•   Collect the documents you’ll need, including information about your vehicle, the current loan, auto insurance, and your income and employment details.

•   Shop around, compare rates, and consider refinancing with the same lender if your current lender offers terms that are right for you.

•   Apply for the auto refinance loan with the lender of your choice.

•   Seek a cosigner if you’re interested in refinancing your auto loan with a cosigner.

•   Once the loan is approved, the lender will pay off the old loan and future payments go to the new one under the new rate and terms.

Recommended: Financing a Car Out of State

The Takeaway

Cosigning a loan comes with plenty of responsibility: You are on the hook for the loan, though you won’t have ownership of the vehicle unless you were specifically added to the title. You may be able to become the primary borrower on the loan if this is your goal, depending on the loan’s fine print and the other party involved. One option could be refinancing the loan and becoming the primary borrower and having the title transferred to you.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

Does a cosigner’s name go on the title of a car?

In most cases, the cosigner of a car loan does not have their name put on the vehicle’s title unless they are specifically listed as a co-owner. However, this can vary by jurisdiction, so it can be wise to do your research.

If the borrower defaults, can a cosigner take ownership of a car?

If the borrower defaults on a car loan, the cosigner becomes liable for payments but does not take ownership of the vehicle unless their name was on the title. This scenario is an important consideration before agreeing to be a cosigner. This default situation could be remedied by the sale or voluntary surrender of the car.

Can a cosigner remove themselves from a car loan?

A cosigner can be removed from a car loan, but the primary borrower must usually be involved in the process. Typically, the loan will need to be refinanced or paid off, or the car can be sold. In some instances, the lender might grant a cosigner release which would keep the loan open. Check with the lender to determine what options are available.

Photo credit: iStock/Miljan Živković

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOALR-Q225-011

The annual percentage rate or APR on a car loan indicates how much it costs to borrow money to buy a car. It includes both the interest rate and fees. The lower the annual percentage rate for cars, the cheaper it is to borrow money. Knowing how to calculate APR on a car loan can help you compare loans and determine which option is best for your budget.

Some lenders may offer 0% APR financing. Others may offer subprime auto loans with the APR well into the double digits on a new car loan. Below, learn all about calculating auto loan APRs so you can make the best choice for your needs.

What Is APR?

APR is the total annual cost to borrow money, including interest and fees, represented as a percentage. It also accounts for any dealer fees, rebates, or costs incurred by the borrower when obtaining any loan, including an auto loan.

Sometimes a loan’s APR and interest rate may get mixed up since they’re both expressed as a percentage. The key difference is that a car loan interest rate is simply a percentage of the principal (the amount borrowed), whereas the APR accounts for fees and additional costs of borrowing money, as well as the interest. For example, the interest rate for a car loan might be 7%. But once various fees and costs are factored in, the APR might be 7.25%.

APR is a better metric for gauging the cost of borrowing than the interest rate alone. Even if two lenders offer the same interest rate and repayment term on a loan, the difference in their fees and extra charges will be revealed in the APR. Comparing APRs can help you find the right auto loan financing or auto loan refinancing for your needs.

Calculating Your Car Loan’s APR

Knowing how to calculate APR for car loans can be of use when assessing financing options.

Lenders are generally required by federal law to disclose the APR and other loan terms before a borrower signs the loan agreement. Still, preparing beforehand can help you determine how a car loan aligns with your budget and financial goals.

Here’s how to calculate APR on a car loan:

1. Gather Key Information

Before diving into the actual arithmetic of how to calculate APR for car loans, you’ll need to collect the following information:

•   Principal. This is the amount of money borrowed. When you’re calculating car loan APR, you can think of car loan principal as the price of the car minus your down payment and the value of a trade-in vehicle (if you traded one in).

•   Interest rate. This represents the percentage charged on top of the principal each year. In your DIY calculation, this may be an estimated value. The best interest rate on a car loan can be as low as 0%.

•   Loan term. This is the length of the auto loan, usually expressed in months or years. Borrowers can have long-term auto loans greater than 84 months or short-term auto loans as low as 12 months. The typical length is five or six years, or 60-72 months.

•   Fees. Any additional costs, such as origination fees, are factored into the APR, so you’ll need to know what those are, too.

•   Taxes. Applicable state, county, and city sales taxes can be rolled into a car loan.

2. Run the APR Equation

Once you have the details above, the following formula can calculate the APR for a car loan:

APR = [(I/P/T) x 365] x 100

•   I = Interest, taxes, and fees

•   P = Principal

•   T = Term (in days)

For this example APR calculation, say the interest amount, fees, and taxes have a combined value of $10,000. The principal is $25,000, and the loan term is 60 months (or 1,825 days).

APR = [($10,000/$25,000/1,825) x 365] x 100

APR = 8%

Some lenders may provide an auto loan calculator to crunch the numbers for you. Typically, you input the borrowed amount, interest rate, loan term, and other information to get APR and monthly payment estimates.

Other factors may impact APR with car loans, but this formula can offer a ballpark figure for your reference.

How Do Auto Lenders Calculate APR?

The method for figuring out what APR to offer on a car loan can differ among lenders. But while the loan terms and approval are ultimately up to the individual lender, these are some key APR components that may be considered:

Down Payment

The amount of money you put down for an auto loan could help secure a lower interest rate and a lower APR. Trading in your old vehicle can be a convenient way to fund a car loan down payment. You can check online sites like CARFAX® or Autotrader® to get an estimate on your trade-in’s value.

Vehicle Age and Condition

If you’re buying a used car, lenders can evaluate a car’s manufacture date, mileage, and general wear and tear when calculating car loan APR. Typically, newer cars fetch lower rates than older vehicles. Some lenders may be unwilling to finance a high-mileage used car purchase.

Loan Term

Loans with longer terms may have higher interest rates than loans with shorter terms. If the lender allows, paying off a car loan early can reduce the overall amount of interest you’d pay during the life of the loan.

Personal Financial Situation

Auto lenders could consider personal financial information, such as how long you’ve been employed and your debt-to-income ratio (DTI) when calculating what APR to offer you. Lenders generally like to see a DTI below 36%, though some may be willing to lend with a figure of up to 50%.

Credit History

A borrower’s credit report may play a large part in the APR of the loan he or she can get. Buyers with excellent credit could even qualify for 0% APR financing on a new car purchase.

Fixed vs Variable APR

Lenders can offer fixed- or variable-rate financing.

Fixed-rate auto loans have consistent payments for the entire loan term, meaning that you can project how much interest you’ll pay each month.

Alternatively, the APR for variable-rate loans can fluctuate as the interest rate changes according to index changes. The APR could increase or decrease over the life of the loan. If you’re unhappy with the APR on your car loan, you may explore auto refinancing or find someone to take over your car loan.

Recommended: Auto Refinance Calculator

Average Auto Loan APRs for Different Credit Scores

Are you concerned about whether you can get subprime auto loans for bad credit? Fret not: There are some auto loan financing options available to borrowers with poor credit scores between 300 and 579.

Your credit score, however, may impact your chances of getting a favorable car loan interest rate and APR. Borrowers with super prime credit had an average new car loan rate of 5.08% compared with 15.43% for borrowers with deep subprime credit in the third quarter of 2024.

While interest rate isn’t as comprehensive as APR, it’s the major component in APR and can illustrate how much rates may vary by credit score. Using data from Experian® (one of the big three credit bureaus), here’s a breakdown of average auto loan interest rates by credit score and car type:

Having a solid credit score can help reduce the overall cost of borrowing money. Checking your credit score beforehand can help you know where you stand before approaching lenders for an auto loan.

When they’re looking at car loan applications, lenders may use a FICO® Auto Score that places greater emphasis on previous auto-loan management and risk than a regular FICO Score does. If you’ve stayed current on car payments for the past seven years, your FICO Auto Score may be in better shape.

Other traditional creditworthiness factors like repayment history and number of accounts are still important, too.

Recommended: Refinance Car With Same Lender

The Takeaway

Understanding how to calculate APR on a car loan is useful when you’re evaluating financing options. It gives a more accurate picture of the cost of borrowing, because it reflects not only the interest rate assessed but also the fees that will be charged. Knowing how lenders calculate APR can help you negotiate and secure the car loan financing that suits you best.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

Is a 0% APR car loan worth it?

Your personal circumstances may dictate whether a 0% APR car loan is right for you. A 0% APR car loan includes no interest charges, but borrowers who accept 0% APR financing on a car may not qualify for certain discounts or bonus cash rebates. A car manufacturer’s cash rebate can reduce your auto loan borrowing costs. Also, only certain prospective buyers may be offered this deal, and only for specific vehicles.

How does auto refinancing affect your car loan APR?

Refinancing your car loan may provide you with a lower APR and/or lower monthly payment. If you accept and get approved for an auto refi loan, your new lender would pay off your original car loan, and you’ll be responsible for repaying the refi loan over a set term. Refinancing a car loan with bad credit may be possible if you have sufficient income.

Does a down payment lower your APR?

Making a down payment on a car reduces the amount of money you need to borrow to finance a car purchase. Lenders may offer a lower car loan interest rate if you make a sizable down payment vs. no down payment on a car. A sizable down payment can also help avoid a scenario known as an upside-down auto loan, which means that you owe more money than the car is worth.

Photo credit: iStock/hirun

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Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOALR-Q225-023

If you’re shopping for a used car, you may come across vehicles that have rebuilt titles. A rebuilt title is assigned once a car that had a salvage title is repaired and is now considered drivable.

Cars with rebuilt titles are often considerably cheaper than cars with clean titles. However, they also carry risks and, as a result, can be more difficult to finance than other types of used cars. Here’s what you need to know about getting a loan for a rebuilt title car.

What Are Rebuilt Car Titles?

Your car title is the legal document that proves you’re the owner of the car. Brand new cars start with a clean title. Later, if the car is in an accident or otherwise sustains damage (perhaps due to a flood, fire, or hurricane) that renders it undrivable, it may receive a salvage title. This means the car is no longer safe to drive and cannot be registered.

However, a salvage title doesn’t necessarily signal the end of the line. In some cases, salvage title vehicles may be repaired and rebuilt. If the repaired vehicle passes inspection and is declared safe to drive, it can then receive a rebuilt title.

You may purchase rebuilt title cars and register them in your name. You may see both salvage and rebuilt titles referred to as “branded” titles. A branded title indicates there’s something unusual about the title.

Buying Cars With Rebuilt Titles

A major advantage to buying a rebuilt title vehicle is price. These cars can be 20% to 40% less expensive than a similar car with a clean title. However, you’ll need to weigh that savings with increased risk. The car’s troubled past can mean that it will need additional (and potentially costly) repairs in the future.

Before buying a car with a rebuilt title, it can be a good idea to find out why the car was branded salvage in the first place. For example, if the car was completely flooded, it can run a higher chance of having mechanical issues in the future. And, you may end up dealing with other issues, such as fried electrical wires or mold. In some states, these vehicles must be branded with a flood title.

You can learn about a rebuilt title car’s history by visiting the National Motor Vehicle Title Information System website VehicleHistory.gov, as well as other vehicle information websites, like Carfax. It’s also a good idea to have a trusted mechanic and body specialist thoroughly inspect the car before making a purchase decision.

Selling Cars With Rebuilt Titles

If you’re thinking about selling a car with a rebuilt title, you’ll need to make sure it’s properly repaired and passes your state’s rebuilt title inspection. Once it passes, you can put it up for sale.

Keep in mind, however, that a rebuilt title car is generally worth much less than its clean titled counterpart. It may be more difficult to sell the car, and potential buyers may attempt to use the rebuilt title to their advantage to negotiate a lower price.

To get the most money out of a car with a rebuilt title, you’ll want to make sure that the vehicle is in the best shape possible, both under the hood and on the exterior. Touching up any cosmetic damage can also boost your chances for a sale.

Financing a Car Loan With a Rebuilt Car Title

If you’re looking to get a loan for a rebuilt title car, you may come up against some challenges. Why are most lenders against financing rebuilt car titles?

The main reason is that lenders are in the business of managing risk. They may see a rebuilt title car as more likely to break down and lose value in the future. If a car doesn’t run and is costly to repair, the borrower may default on the loan. If that happens, the lender will need to repossess the vehicle and sell it to recoup their losses. If the car doesn’t run, they may not be able to collect much money on a sale.

While large banks generally won’t provide financing for a rebuilt title car, you may have success with a smaller bank, credit union, or online lender.

To increase your chances of getting approved for a rebuilt title car loan, it’s a good idea to obtain (and present) a mechanic’s statement that the car has been thoroughly rehabilitated and is in excellent — and safe — running condition. You’ll also likely need to bring along a statement from your auto insurance carrier, indicating that they are willing to insure the vehicle. Finally, it helps if you have good credit, since this further mitigates risk for the lender.

Recommended: Reinstate Car Loan After Repossession

Benefits of Financing Rebuilt Car Titles

The main advantage of financing any type of used (or new) vehicle is that it allows you to buy and have access to a car without having to pay the full price upfront. The way car loans work is that you get the purchase price of the car upfront, then pay that money back (plus interest) in monthly installments over time.

When you are financing a rebuilt title car, you have the added advantage of a lower initial price tag, which means your loan size will be smaller.

Financing a rebuilt title car can also be a good way to build credit, provided you use your loan responsibly and make all of your payments on time. A strong payment history can have a significant  — and positive — impact on your credit score. Better credit, in turn, can give you access to financing (whether for a car or a mortgage) with attractive rates and terms in the future.

Recommended: Does Financing a Car Build Credit?

Risks of Financing Rebuilt Title Cars

There are also some downsides to financing a rebuilt title car. One of the biggest is finding a lender that is willing to offer a loan for a rebuilt title car.

Once you do find one, you can run into another thorny issue: high interest. Lenders generally charge higher rates for rebuilt title cars than they do for clean title cars simply due to the higher risk involved.

Also, keep in mind that financing a rebuilt title car involves risk for you, too. These cars generally have a higher chance of future problems and, as a result, can lose value quickly. If the car loses value faster than the loan is paid off, you could end up with an upside-down car loan, meaning the car is worth less than what is owed on it.

Recommended: What Should Your Average Car Payment Be?

Refinancing a Car Loan With a Rebuilt Car Title

If you are able to secure financing for a rebuilt title car, refinancing might be an option for you down the road. When you refinance, you pay off your old loan with a new loan, ideally with a better interest rate and/or preferable terms.

You might consider refinancing your auto loan if your initial loan came with a high interest rate, the monthly payments have become unmanageable, and/or you’ve built your credit score (qualifying you for a lower interest rate).

That said, it may be just as difficult, if not more so, to find a lender willing to offer a refinance loan than it was to find financing it in the first place.

Recommended: Pros and Cons of Car Refinancing

Requirements for Refinancing an Auto Loan

Requirements for refinancing an auto loan will vary by lender. Typically, however, each lender will have rules about:

•   Time left on the loan: Lenders will often want you to have paid at least six months into the loan and have at least six months left to go on it. This shows that you have an established history of payments, while giving them enough time to profit off interest.

•   Amount of money left on the loan: Refinancing is essentially taking out a new auto loan. Typically, lenders don’t want to offer small amounts, since they won’t be able to make as much money from them.

•   Mileage and model year: If you bought a rebuilt title car with significant mileage — or you’ve racked up mileage since you bought it — you may not be able to refinance it. Lenders often have caps of 100,000 to 150,000 miles. Model year can also be a factor. Generally, lenders won’t refinance a car that is more than 10 years old.

•   Credit score: As with any loan, your credit score will impact whether or not you are able to refinance your used car. If you’ve built your credit score since your original auto loan, however, you might be able to score a lower interest rate on a refinance.

Recommended: What to Ask When You are Refinancing

The Takeaway

Buying a rebuilt title car involves a certain amount of risk. Depending on the car’s history, it may be more likely than other used cars to experience mechanical issues down the road.

If you’re able to find a rebuilt title car you like and it passes inspection from an independent mechanic, it could end up being a great deal. In addition, you may be able to find a lender willing to finance (or refinance) the car.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

Can you finance a rebuilt title car?

Yes, just keep in mind that it can take some digging to find a lender that offers loans for rebuilt title cars. Also, interest rates can run high compared to loans for clean title cars.

What are your loan options for cars with a rebuilt title?

Loan options for cars with a rebuilt title are limited, but some lenders do offer financing. These include credit unions that finance rebuilt titles, specialty lenders, and subprime auto loan providers. Interest rates are often higher due to the vehicle’s diminished value and perceived risk, and a larger down payment may also be required. You could also consider a personal loan for car financing.

Can you refinance a car loan for a rebuilt car title?

Refinancing a car loan for a rebuilt title is possible but challenging. Lenders often view rebuilt titles as high-risk, leading to stricter requirements and higher interest rates. Some specialized lenders may offer refinancing options, but you’ll need strong credit and documentation proving the vehicle’s roadworthiness and value.

Photo credit: iStock/choochart choochaikupt

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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