Shopping around for the best auto loan is simple using The Auto Dealer. But understanding and comparing auto loans can be difficult unless you know the basics. Lenders have many types of loans with special financing features. But in those loans, they use different terminology and charge different fees. Keeping in mind that the lowest monthly payment doesn�t necessarily mean the best or the least expensive loan.

But by understanding the common language, you can see how different loans compare against one another.

The total up-front fees and charges. These are the fees charged by the lender to initiate the loan. No matter what the lender calls them: loan origination fees or processing fees, a fee is a fee, and they can really add them up. Take the time to review the terms of the loan, and add up all the costs for initiating the loan.

The annual percentage rate (APR). This number includes the interest rate on the loan plus all lender fees and charges, and represents the true annual cost of the loan to the borrower, expressed as a percentage of the principal of the loan. The lower the APR, the better. The federal Truth in Lending Act requires all lenders to calculate APR the same way and to disclose it in bold print on every consumer loan agreement. Comparing APRs may show that a low-interest loan with high fees and service charges actually is more expensive than a loan with a higher interest rate and low or no additional fees and charges.

The total cost of the loan, or the sum of all the monthly payments you will make plus all fees and charges. This is a better way to compare the cost of two loans than monthly payments, because it includes fees and charges plus total interest charges over time. A $10,000 loan at 6.5 percent interest amortized over 60 months will carry a lower monthly payment than the same loan at the same rate amortized over 36 months. But the total cost of the 60-month loan will be greater, because you will pay much more interest.

If possible, avoid longer-term auto loans. Because a car depreciates very quickly in the first year or two you own it, from there on in you may owe more on your loan than the car would fetch at resale.

Prepayment Options. Paying down your car loan faster with extra monthly payments can save you quite a lot in interest. Compare prepayment options attached to different loans to see how many extra payments you�re allowed per year � the more the better. If a loan doesn�t have a prepayment options, see if you can negotiate one.

Early-payoff penalties. Check out the interest penalties charged by the loan agreement if you were to pay off the entire loan early. Many lenders require you to pay the total interest charges remaining until the loan�s original maturity date. Others may charge a set penalty, such as three months� worth of interest. The best loan is the one with the lowest penalty.