Posts tagged ‘Car loan interest rates’

Useful tips in getting the lowest new car loan interest rate

Most car buyers are concerned about new car loan interest rates before they purchase their vehicles. The interest rate is important because it helps determine the actual amount needed to pay for the vehicle. Although purchasing a car on cash basis is a good option, most buyers prefer to purchase through a loan since a car depreciates faster each year.

Factors affecting the interest rates

There are several factors affecting the interest rate of the loan. New car interest loans for example are based on the prime rate from the federal government. This rate may rise and fall depending on the situation of the economy of the nation. Due to this, getting the lowest interest rate for new car loans should be accompanied by proper research of the existing prime rate. In case you are planning to purchase a new car through a loan, you should patiently wait for the prime rate to go down. It is on this situation where the banks and other lenders offer low interest rates for the loans they provide.

In addition to this, the loan term also affects the interest rate of the loan. Long term loans have higher interest rates compared to short term loans. Given these factors, you should watch out for the prime rate to go down and go for a short term loan in order to obtain the lowest new car loan interest rate.

Provide a higher down payment

Providing a higher down payment for a car loan reduces the monthly payments involved as well as encourages the lender to provide lower interest rate. Through this you would be paying lower monthly premiums and get the chance to pay the loan off in a shorter period.

Most new car dealers also offer 0% interest rates to car buyers. However, these deals usually require higher down payments of up to 50% or 70% of the car

New car loan interest rates: How to obtain lower payments

Obtaining the best car loan interest rates may not be that easy and usually takes some time. What is important is that you are able to complete a good research before going to the nearest dealership to buy the car so that have would be a great chance of getting a good rate. Bear in mind that the rates involved in a car loan vary according to its structure and the credit history you own.

Although you might find the best rates offered by internet based lenders by using, lending institutions such as banks and credit unions are also capable of providing you with the best loan rates that are available in your area. This article provides you with a guide on how to obtain the best rates from these credit institutions.

Know your credit score

One of the most important things that you need to do before visiting the car dealership is to know your credit score. Review your credit report and your credit score by using MyFICO. Examine all of the information included on the credit report and make sure that all of these are correct. In case some of the information written on the report is not correct, you need to file a complaint from each of the three bureaus.

Search for existing special financing rates

You also need to check the special financing rates offered by manufacturers to their buyers. You can either check the special offers and incentives by checking the manufacturer

Useful advice in calculating the car loan interest rate

The car loan interest that you pay depends on several factors. In case you wish to purchase a car and you are in search for the best interest rate, you might be interested in knowing how your credit score affects the loan terms that are appropriate for you. Obtaining car loans with lower rates are easier when you know the factors that directly influence the interest rates the lender would offer for you. Through this, you are able to alter the factors that you can control and therefore reduce your car loan rates. In case you are eager to learn more as to how the interest rate of a car loan is calculated, this article would explain some of the factors involved.

The lender

The loan provider or the lender has something to do with the car loan interest rates tied to the loans offered to you. Each lender has their own way of calculating the interest rate placed on the loans they offer. In order to find the best rates, you need to request for loan quotes from different lenders so that you can compare these.

The amount of down payment provided

The down payment you provide when you obtain a loan to finance your car has a direct effect on the interest rate and the payments you would be paying. The down is deducted from the principal amount you borrowed from a lender and the interest rate is usually calculated based on the remaining amount that you need to pay all throughout the loan term. This simply means that a higher down payment could result to lower interest rate.

The credit score you own

Most lenders use your credit score in calculating the interest of the loan offered to you. When your credit score is high, lenders are willing to charge you with lower interest. If your credit score on the other hand is low, you might probably be charged with higher interest since lenders would view you as a financial risk with a greater tendency of running away from your financial obligation.

The car loan term

Long term loans are usually charged with higher interest since you are given a longer period to pay the loaned amount off. Short term loans on the other hand are charged with lower interest since the loan is paid-off in a shorter period and the monthly payments are higher compared to long term loan

Factors used by lenders to calculate car loan interest rates

There are many factors that most lenders use in calculating car loan interest rates. This makes the interest rates one of the aspects of a car loan that is difficult to understand. However, you can somehow obtain a rough estimate of your car loan rate by knowing some of the factors used in the calculation. This article provides some of the factors used in the calculation. This includes the following:

Credit history

The borrower

Secrets in getting the best car loan interest rates

Car loan interest rates are sometimes too complicated to handle. Failure to manage this rate might cause you to experience difficulty in handling your finances and the worst possible effect of this is that it could eventually ruin your credit history. However, there are several secrets on how to manage these rates well and obtain the lowest interest rates for your car loan. Some of these secrets are enumerated below in order to help you manage your loan

Car loan interest rates and bad credit facts

Most of the time, car loan interest rates and bad credit facts are not so compatible with each other. Creditors with FICA score below 500 are usually having hard times looking for loans that they could use to finance their vehicle purchase. In most cases, they usually obtain loans with higher interests and end up paying more than what their vehicle costs. Besides these, there are other important facts in financing that you need to understand. It is therefore important to know these facts before jumping into car financing especially when you own a bad credit score. Some of these facts are the following:

Higher financing rate

Car financing for bad credit score holders usually work the same way as obtaining bank loan. The creditor agrees to pay a certain amount of monthly payment within a specified time. However, bad credit holders pay larger down payments and interest rates. The total payback amount can be larger than the actual cost of the car. In case these creditors decide to sell their vehicle in the future, there is the probability of getting less profit for the car sale.

Higher down payment

Bad credit score holders are usually required to pay higher amount for down payments. Compared to good credit score holders that usually pay 10% to 20% down payment, bad credit score holders might be required to pay up to 50% of the car