I was asked by one of my clients, “What is considered a high interest car loan?” In answering them I thought I would share my reaction with you, just in case you had the same question or a similar question run across your mind lately.
It can be hard to figure out just what is a high interest car loan now days. Inbetween all the varying auto rates and the promotional rates for fresh cars, you can’t indeed tell if you are getting a good rate or being ripped off. The best way to know if you are getting a good rate of interest on your car loan is to do your homework and research. It can take just as much time to figure out if you are getting the best deal on your interest rate, as it took you to research the car you are buying.
Here are some factors that can help you determine if you are getting a good interest rate or not.
Sign Of The Times:
Interest rates can be affected by the state of the national economy and also by local and state economies where you live. Rates can go down or up depending on the state of the economy. One way to determine if you are being charged a high rate or if it is a result of a bad economy, is to compare it to what other places are suggesting.
Fresh Cars vs Used Cars
There can be a difference in interest rates depending if you are looking at a fresh car or a used one, and how old the used car is. Don’t expect to find the same low rates that fresh car manufactures are suggesting, on the used car you want. (Used car loan programs don’t come with zero percent interest.)
Your Individual Credit
One of the largest factors for determining the rate of interest you are going to pay for a car loan is your own credit score. If you have excellent credit you will get a much lower rate. If your credit score is low, then you will be charged a higher rate of interest. Keep in mind that even however you may have a low credit score you can find some variances in the rates you are being charged. If you want to see what you are going to be charged for a car loan, pull your credit report and see what your score is. That will give you some idea to what you should be paying.
What Is The Average Rate?
The average rate will switch as the economy switches, so it is unlikely to calculate an average rate, and have it be of any use when you go to buy your car. However, if you go to CarDownLoan.com you can get an average to go by. You should expect a fresh car loan of Four to 7 percent if you have good credit. If you have good credit, and find yourself being quoted a higher rate than I just mentioned, then chances are you are being charged a high rate of interest. Some in-house financing can go from Legal to 28 percent, which is truly high.