Find the Best Car Loans in Baltimore, MD

How to get an auto loan in Baltimore

When it comes to auto loans, the lender market in Baltimore is extensive. National banks, local credit unions, car dealerships and online lenders give consumers a variety of choices. Finding lenders is easy. The process of finding the right one and getting approved is a bit trickier.

Getting approved for a loan before car shopping is one way to make the experience more straightforward. You can be approved online, by phone or in person. Getting pre-approved for a loan lets you:

• Compare multiple loans
• Set a budget before shopping
• Negotiate the price of a car as a cash buyer
• Shop at any dealership

If you have the time, get pre-approved by two or three lenders for a clear picture of your financing options.

Getting approved for a car loan in Baltimore

The three main factors in getting approved for a car loan in Baltimore are your credit history, the amount of your down payment and the vehicle being financed. Older vehicles and cars with high mileage are not considered financeable because they pose a higher risk to the lender. People are more likely to default on their loan if the vehicle has a major breakdown.

Other factors lenders in Baltimore may take into consideration are your income and expenses, employment history, the loan term and liquid assets. To qualify for most loans, all you need is a good credit score and proof of residency, income and insurance. Making a more significant down payment generally increases your chance of being approved for a loan.

Knowing your credit score before applying for loans lets you understand the annual percentage rate (APR) you’re likely to receive. Most lenders consider credit scores of 670 to 739 to be good. Scores higher than 740 are considered very good or exceptional.

Comparing car loans in Baltimore

When comparing loan offers, pay attention to the total cost of the loan, which is determined by your annual percentage rate (APR), loan terms and down payment.

• APR: The higher your credit score, the lower the APR lenders offer you. Car buyers with excellent credit receive loans with APRs between 3 and 5 percent. Baltimore residents with bad credit or no credit history receive loans between 12 to 18 percent or higher.
• Down payment: While many loans may not require a down payment, paying more money upfront on your car lets you reduce your monthly payments and the length of your loan by letting you finance less of the purchase price.
• Fees and taxes: Your lender or dealership may charge fees that increase the total price of the vehicle. You also need to be sure your loan amount is enough to cover state sales tax, title and registration fees and the cost of your car insurance.
• Loan term: Most auto loans in Baltimore are paid off between 36 and 60 months, though some lenders offer terms up to seven years. Extended loans reduce your monthly payments but increase the total cost of the loan by accruing more interest.

Just a few points on your APR or an additional year on your loan have a significant impact on the total loan cost. The following table compares estimated interest rates by credit score and total interest paid on a $23,000 loan over five-, six- and seven-year terms.

Estimated interest rates and total interest on a $23,000 loan

Estimated interest rate (credit score)	Total interest paid over 5-year term	Total interest paid over 6-year term	Total interest paid over 7-year term
3.6 (720-850)	$2,166.46	$2,607.7	$3,053.89
4.95 (690-719)	$3,010.70	$3,631.38	$4,261.34
7.02 (660-689)	$4,338.68	$5,249.06	$6,177.95
9.72 (620-659)	$6,131.16	$7,445.48	$8,794.67
14.06 (590-619)	$9,153.13	$11,176.33	$13,269.77
15.24 (500-589)	$10,004.21	$12,232.34	$14,541.95

If you opt for a smaller loan, interest can still rack up to the thousands if you have a high APR or extended loan term. The following table compares the same estimated interest rates by credit score and interest paid on a $13,000 loan over five-, six- and seven-year terms.

Estimated interest rates and total interest on a $13,000 loan

Estimated interest rate (credit score)	Total interest paid over 5-year term	Total interest paid over 6-year term	Total interest paid over 7-year term
3.6 (720-850)	$1,224.52	$1,473.92	$1,726.11
4.95 (690-719)	$1,701.70	$2,052.52	$2,408.59
7.02 (660-689)	$2,452.30	$2,966.86	$3,491.88
9.72 (620-659)	$3,465.44	$4,208.31	$4,970.90
14.06 (590-619)	$5,173.51	$6,317.06	$7,500.30
15.24 (500-589)	$5,654.55	$6,913.93	$8,219.36

Even with a smaller loan amount, you pay more than $8,000 in interest in just seven years with a rate of 15 percent or more.

The Consumer Financial Protection Bureau offers great resources for comparing loan terms, learning about all your options, understanding which fees are negotiable and providing tips for closing the deal.

Don’t forget to visit the Maryland Motor Vehicle Administration online or stop in a local MVA branch to get your documents in order before the purchase is finalized.

Getting a car loan with bad credit in Baltimore

When your credit score is low, getting a loan with good rates in Baltimore can seem challenging. There are multiple options, however, and many online lenders specialize in working with borrowers with bad credit or no credit history. Putting down a significant down payment can not only help you qualify for a loan but help lower the high APRs offered to borrowers with poor credit.

If it’s possible, get a co-signer with good credit. Their score lets you qualify for a loan and opens the door for a lower APR, but your co-signer is responsible for the loan if you default.

If your credit score is in rough shape, putting the purchase off for a year to focus on rebuilding your credit can save you thousands over the course of an auto loan, especially if the terms of the loan exceed five years. If you’re unable to wait, most Baltimore lenders let you refinance your loan after six months to a year if you qualify for better rates.