There are so many car loan providers today which mean you can get some excellent deals from them as compared to a decade ago. However, you need to understand a few factors that are typical for determining the type of car loan that you get and the interests you pay. If you consider these factors and adhere to them, you will be confident that you know the interest rate you get offered by the lender.
Let us look at a few criteria that you might want to keep in mind when it comes to a car loan.
The Kind of Car You buy
The interest rates vary depending on the type of car – new car vs. old car. A used car will attract a higher interest rate compared to a new car. If the car is old, then it attracts a higher rate of interest if the loan gets approved. At times, if the car is too old, the lender might fail to honour the loan. To find out more, continue reading this.
The Time of the Loan
The length if the loan repayment can be anything from 24 months up. Some providers even offer seven years to repay the loan especially if you are unable to pay the loan within the specified time. The rule is that the more extended the loan period, the higher the interest rate.
Your Credit Status
If you have a better credit standing, you are liable for a lower interest rate because it is perceived that you carry a lower risk compared to someone with a poor credit standing. It is therefore recommended that you make sure that you have a high credit score when it comes to applying for any loan as it makes a huge difference in terms of the interest rate you pay and the loan package you are given.
If the current auto market isn’t performing so well, then you might end up paying a low interest rate for the loan because the seller is doing anything and everything to attract buyers to the lot. You also get discounts, cash incentives, gifts and attractive interests as well as low down payment.
You need to take time to understand what you need to do to make your loan interest low. This depends a lot on the type of car, your credit score and a host of other things that you need to take care of.