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| How Important is Car Loan Rates
Written by Melinda Sargent
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Car loans rates are one of the first people look at when financing their car. It is a very important factor. Your car loans rates depends on several factors. One factor is credit. If you have bad credit car loans you will pay higher rates. This information is for new cars or used car loans. Car Loans Rates and the Length of the LoanHow long you finance your car will affect your car loan rate. Most lenders or car dealers will charge a higher interest rate the longer the life of the loan. The shorter time you finance a car the better. Your car will be paid off sooner, you will pay less in finance charges and you will run less of a chance of having a reverse equity on the car. Reverse equity you owe more on the car then the car is worth.
The Percentage Rate on the Car Loan RatesThe actual percentage rate you pay on the car loan affects the finance charges you pay. The best way is for an n example. There is a loan being offered on the same car for the same length of time one is from the dealership for 3.5% and another is from a dealership down the road for 9.5%. Everything is identical. Obviously the 9.5% overall you will pay more for that car, but how much more? 9.5% you get monthly payments $320.32 or 3.5% you get monthly payments $293.02. Does not appear to be a lot of money but it is a difference of 27.30 a month. Over 3 years that is a total of $982.80. That is almost $1000.00 savings if you find the right car loans rates.Car Loan Rates and FICO ScoreThe FICO score is one of the largest factors in your car loan rates. If you FICO score is too low you may not be able to find a car loan. If it is bad credit then you will be paying a much higher car loan rates then if you had good credit or excellent credit.Bad Credit 300 - 619 Fair Credit 620 - 699 Good Credit 700 - 759 Excellent Credit 760 - 850 It will pay to do a little homework before you purchase your next car. There are other factors to consider. A dealer may offer other incentives like rebates and service on the vehicle that could save you more money then shopping for the best car loan rates. You will have to weigh all the options, but do your homework a $1000.00 is a lot of money. |