• Know your automobile finance options.Taillight and spoiler on new white car image by steven Husk from Fotolia.com
  
  There are several finance options available to someone looking to finance an automobile. To help decide on the best deal and know what's available to you, you should know your credit history. Someone with poor credit might not obtain approval for as long as a common five-year term, while someone with excellent credit might finance as long as 84 months.
  
  

Term

• You can borrow a loan for a duration of one to seven-years. Often, you'll see dealers advertise rates as low as zero-percent, but the payments for this term are usually not within the budget for most people. Rates stay the same up to 60 months for financing. A 72 month loan rate is higher than the 60 month term, and an 84 month loan justifies a higher rate again. Some banks offer odd terms, such as a 66 month term. Rates differ by financial institution and credit history. Often, financing a newer car will warrant a lower rate than an older model. Most lenders advertise their lowest rates online, as does a vehicle manufacturer. Rates, by law, are capped at 25 to 29 percent in most states. The lower your credit rating is, the higher your rate. Some people find that although they can obtain an approval, they are approved with stipulations, such as the inability to go over a 60 month term.
  
  

Rates

• There are three different lenders you can choose from; manufacturer, traditional bank or a subprime lender. You can finance through the manufacturer at a dealership---all vehicle name brands provide their own bank. Rates at these banks are often quite competitive---you'll see rates similar to zero, 1.9, 2.9 or even a 4.9 percent rate for a 72 month term, which is impossible to find at a traditional lending facility. Manufacturer incentives are also easier to get approved for---you are either approved, or you're not. Traditional banks increase the rate in accordance with your credit. Traditional banks, such as the ones in your town, are normally where most people hold a checking account. Credit unions are very competitive in comparison to a national based lender, like Bank of America of Wachovia, which hold a local presence, as well. There are Credit Unions in most places, but are stationed only inside of a county or town. Thirdly, subprime banks are an option for people with poor credit. Subprime lenders extend loans to people at a high interest rate, often in the high 20 percent range.
  
  

Money Down

• Anyone is free to put money towards a vehicle to lessen the amount of the loan. People with fair to poor credit may be required to put money down for loan approval---for a reason known as a loan-to-value ratio. A bank will lend money provided there is some equity in the vehicle purchased to protect the institutions risk of non-payment. Those with an excellent credit standing may see a loan-to-value ratio of 120 percent or higher. However, banks use their own appraisal sources to determine a vehicles worth and will not lend for an unreasonable amount past the vehicle's worth. A 120 percent loan-to-value ratio allows a good credit customer to finance any extra fees and add-ons with ease.