The interest rate on an auto loan reflects only the cost of borrowing the principal, while the APR (annual percentage rate) includes the interest rate plus most lender fees, giving you a more complete picture of the loan’s true cost. This distinction matters because two loans with identical interest rates can have different APRs if one lender charges more in fees, and comparing APR rather than just the advertised rate is the more accurate way to shop between offers. Our auto loan calculator lets you input either figure to see the resulting monthly payment and total cost.
When comparing loan offers from a dealership versus an outside lender, always ask for the APR specifically, since dealers sometimes advertise a lower interest rate that doesn’t reflect added fees. Our comparison of dealer financing vs. bank auto loans walks through how these offers typically differ, and if you’re deciding between a new or used vehicle purchase, our guide on new vs. used car auto loans explains why APRs often differ between the two as well.