New car loan: A new car loan will be a loan specifically designed to purchase a brand-new car from a dealership. Since new cars are usually more expensive than used cars, you will typically have a higher loan.

However, interest rates will be lower on new cars than on used ones because new cars will come with warranties and are less likely to break down in the future. When a borrower applies for a new car loan lenders will typically look at their income, credit score, and employment history to determine their eligibility.

Borrowers with positive credit accounts are able to secure lower interest rates which can save you money on the life of the loan. It’s important to note that new cars will come with certain restrictions, for example, the lender may require you to put a down payment and even limit the loan terms you’re able to receive.

Additionally, new car loans could have higher payments and other additional fees. It’s important to way your options and get advice from financial advisors before making a decision.

Used car loan: Used car loans are designed for purchasing a pre-owned car. Used cars are usually less expensive than new cars, making them an affordable option for many buyers. However, interest rates for a used car loan can be higher than for new cars because pre-owned cars are typically more likely to require repairs in the future making it a riskier loan option for lenders.

When you apply for a used car loan lenders will use your income, credit score, and employment to determine your ability to qualify for the loan. Having a higher credit score will increase your chances of approval and typically qualify you for a lower interest rate.

A used car loan may come with certain restrictions and requirements. For example, lenders may limit the year or miles of the car they are willing to lend on.

Also, they might limit the terms you’re able to choose from. Overall used car loans can be a great option for many borrowers, but they should be careful and look at all the options available to them before making a decision. 

Dealer financing: Many car dealerships will offer financing options to their customer as a way to simplify the buying process for the borrower. Usually financing with dealers will income loans from third-party lenders, financial institutions, or the dealership itself.

Financing with a dealership can be convincing as they will often complete the entire transaction at the dealership without leaving. Also, some dealers may have special deals or promotions that may only be available by using their lenders.

But it’s important to be aware that interest rates for dealers may be higher than other options such as credit unions. This is typical because dealers act as middle man and will take a cut of the profit for their service, also may be additional charges added such as processing fees or even prepayment penalties.

To make sure you’re getting the best deal on your financing options you should shop around and compare all the rates available to you. Also, you should carefully review all the rems and conditions of any financing options before making a decision.