Average car loan interest: Knowing what others pay

When searching for a new or used car to buy, it is important to understand the average car loan interest that other individuals pay. Although the interest rate you have for the loan depends on your employment status and the credit score, it is still advisable to check on the interest rates paid by other creditors. Through this, you are able to check whether you are paying more for the interest compared to them. Read on the information provided in this article to understand how much you pay for the interest compared to that of others.

How much others are paying

Although the amount of interest for loans varies depending on the creditor’s financial condition, some lenders provide an average of 7% interest for most car loans. In case you decide to borrow $16,000 with the average rate of 7%, you might end up paying around $350 for a 4-year loan.

However, you can get a lower interest by contacting at least three lenders. Request for the quotes the offer for loans and compare them. You can choose the loon with the lowest interest and pre-qualify for it.

How much do people with bad credit pay

People with bar credit scores usually pay for relatively high interests on their loans. In the event that the FICO score you posses is below 680, lenders usually charge interest rates from 22% up to 30%. In case the score is in the borderline, you might need to pay for a larger down payment to be able to obtain lower interest and loan rate.

It is also helpful for you to use the loan calculators offered online to determine how much it would cost you to finance a brand new or used car sold on the market.

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