According to Statista, around 17 million cars and trucks were sold in the U.S. in 2018. With all these car sales, many people still don't have a good understanding of the car-buying process. If you're looking to buy a vehicle, here's a quick guide to understanding auto loan rates.
Average Loan Rates
If you're shopping for a car, you might be wondering what sort of interest rate you can expect and how much that's going to cost you. Auto loans are no different from credit cards and other types of loans; lenders offer better interest rates to low-risk borrowers, which means a higher credit score equals a lower interest rate.
Generally speaking, auto loans come with lower interest rates than many other types of loans. If you have a credit score between 300 and 500, you're in the lowest bracket and can expect to pay 13-20% in interest. 781 to 850 is the highest credit score bracket, which can net you an interest rate of just under 4%. Typically, the higher auto loan rates for each credit bracket are for used carsv, while the lower rates are for new car loans. Connect with our team to learn the exact rates we offer!
The Loan Term
The total cost of your auto loan also depends on the duration of the loan, known as the loan term. Most lenders offer 60-month and 72-month car loans. 60-month car loans will save you more money overall, but you have to be able to afford the higher monthly payments. 72-month car loans are a good option if you're looking for the lowest monthly payment and don't mind paying a little more in the long run.
Choosing the Right Loan
Getting the best auto loan rates starts with shopping around and choosing the right loan. You may be able to get a lower interest rate from certain lenders, and you can look for special offers and other loan conditions that might help you out. Take your time to find a loan that fits your finances.
Buying your first car can be overwhelming, even if you're buying a more affordable used car. Understanding auto loan rates and how auto loans work can help you save a significant amount, which is important when you're making a purchase as big as buying your first car. If you need help finding an auto loan that works for you, give us a call and we'll help you sort everything out.