A traditional auto loan is the most straightforward way to finance a vehicle. You borrow the full purchase price of the car, and your monthly payment is based on the entire amount financed — including taxes and fees — divided over your chosen term at a fixed interest rate. At the end of the term, you own the vehicle outright with no additional payment required. Auto loans typically range from 24 to 84 months, giving you flexibility in how you structure your payments.
Leasing allows you to drive a new vehicle for a set term — typically 24, 36, or 39 months — by paying only for the portion of the car's value you use. Your monthly payment is based on the difference between the vehicle's selling price and its residual value (what the car is worth at lease end), plus a finance charge based on the money factor. At the end of the lease, you simply return the vehicle or purchase it at the predetermined residual price. Leasing typically offers the lowest monthly payment and allows you to drive a new car every few years.
The Select Term is residualized financing for a fixed 60-month term — uniquely combining the best benefits of both a traditional loan and a lease. Like a lease, your monthly payment is based on a residual value of the MSRP, keeping your payment low. Like a loan, you enjoy a comfortable 60-month term with no mileage cap and full ownership rights.
At the end of the 60-month term, you have two options: trade it in for your next vehicle, or make the final balloon payment to fully own the car outright. You can also trade in anytime after the 3rd year when equity typically builds.
The result? A monthly payment that is typically lower than traditional financing — and at the end of the day, everyone appreciates a lower monthly payment.