Auto financing

You can pay the entire negotiated price of the vehicle using cash (also known as a down payment), financing, the value of your trade-in, or a combination of these. Car dealers can often provide in-house financing for your vehicle purchase, but it’s wise to speak with other lenders as well so you can make an informed decision. Prepare a list of questions and ask for details on total price, the length of the loan (commonly referred to as the “term,” expressed in months), the annual percentage rate (APR) and potential penalties.

Lenders consider your credit history when offering you a loan, so get to know your credit score. If you’re a U.S. Bank customer, you can view your credit score anytime for free in the U.S. Bank Mobile App or online banking.

There are a few other factors involved. Longer loan terms offer lower monthly payments but tend to be accompanied by higher APRs, meaning you’ll pay more for your vehicle in the long run. Conversely, a higher monthly payment will help you pay off your vehicle sooner, and the reduced interest will save you money over the term of the loan. Consider whether smaller monthly payments outweigh the potential for greater accrued interest. Research competitive APRs (they can vary considerably) and what different vehicles typically sell for, based on their make, model and age.

You may also wish to consider applying for pre-approval so you know how much you can spend before you start shopping. If you’re pre-approved for a U.S. Bank auto loan, you’ll receive an approval letter you can bring to any of our participating dealerships for a simplified financing experience. You can shop online for cars at participating dealerships in the U.S. Bank vehicle marketplace.

If you prefer to purchase from a private seller rather than a dealership, we may be able to help. A personal loan from U.S. Bank can give you quick access to funds for your car-buying needs.

Like to drive a new car every few years? Leasing is a form of financing to consider when you don't intend to keep the vehicle indefinitely. You may need a down payment at signing (although a zero-down lease may be available if your credit score is above 800) and your monthly payments are based on the depreciation of the car over the term of the lease.

You’ll typically pay lower monthly payments on a lease than on a loan for a similar vehicle, especially if you can make a substantial down payment. However, leasing also includes some restrictions, such as maximum mileage and limitations on wear and tear. These could cause you to incur penalties or additional costs, especially if you want to return the vehicle early, before the full lease term is up. Carefully consider the pros and cons of leasing vs. purchasing a car before deciding which option best suits you.

Once your lease contract is up, you’ll have a decision to make:

• Return the car to the dealership, pay off the remaining costs, and lease or buy a new vehicle, or
  
  
• Buy out the lease on the vehicle and keep it until you’re ready for a new one.

An auto refinance replaces a previously negotiated loan with a new loan with different terms (for example, if you took out the original loan at a higher APR, but interest rates have gone down since). Refinancing a car may put money back in your pocket if you can lower payments or pay your loan off sooner.

To find out if refinancing can save you money, you’ll want to calculate the current value of your car. If you’re a U.S. Bank customer, you can enter your vehicle into our U.S. Bank Vehicle Manager to access free, real-time Kelley Blue Book valuations and much more. Compare rates and fees – and know that your credit score also factors into the rate you’re quoted.

If you lease a vehicle and fall in love with it, you may wish to continue driving it past the expiration of your lease contract. In this case, you may choose to buy out your lease. In a lease buyout, you purchase the car or truck for a price that takes into account its depreciation over the lease period. The lease buyout purchase price typically includes a purchase option fee plus any applicable taxes and outstanding fees remaining per your lease agreement.

Buying out your lease can provide other benefits, too. If you’ve exceeded your allowable mileage or the leased vehicle has sustained damage during the lease period, a lease buyout may allow you to avoid surcharges and fees you would otherwise owe under the lease agreement.