When you are searching for different car financing options it is necessary to obtain the accurate average car loan APR. This is important because you would know the possible interest rate that you might be paying in case you get a car loan. Besides this, you must also bear in mind that the interest rate is affected by different factors such as the credit score.
Since the credit score is a significant factor that lenders consider in calculating the interest rate it is advisable that you obtain a copy of your credit score before searching for lenders. You need to examine the information written on it and try to determine if there are errors in it. Check your credit score if it is good or bad. A credit score of 720 or higher means that you are qualified for great financing options. In case you have a higher credit score most banks would provide you with 4%interest rate for a new car loan and lower than 5% for a used car loan.
Obtaining the loan that suits your needs
Before going to any dealer to purchase a new or used car, make sure that you have done an extensive research. This would help you in negotiating with lenders to get a better financing deal. Since most dealers would offer rates that are higher than what the bank are offering, you need to use the information you have learned about the car you wish to buy while negotiating.
The average auto loan APR
Lenders usually use your income, credit score, and other factors to calculate the interest rate offered to you. However, most banks and other lenders would most of the time provide an average interest rate of 7% for new cars and 7.72% interest for used cars. There are also lenders that offer zero percent financing deals. In case a lender lets you decide on what to obtain between a 0%interest financing and a rebate, make sure to do the calculations before getting each of the two options. The calculation would allow you to determine which of the two options would benefit you more.
Loans for bad credit holders
When you are stuck in a bad credit situation you should expect that you are going to pay for higher interest rates. Most bad credit lenders charge 25 -30% interest for the loan they provide. Given this situation, you need to pay the loan faithfully for a few months and the refinance the vehicle. The faithful payments would improve your credit score and refinancing would lower your loan rates down.