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 answer 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.
Between all the varying auto rates and the promotional rates for new cars, you can’t really tell if you are getting a good rate or paying too much.
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.
It’s Just A 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 offering.
What You Should Know About New Cars Versus Used Cars
There can be a difference in interest rates depending if your are looking at a new car or a used one, and how old the used car is. Don’t expect to find the same low rates that new car manufactures are offering, on the used car you want. (Used car loan programs don’t come with zero percent interest.)
Your Personal Credit History Determines What You Get or Don’t Get
One of the biggest 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 though you may have a low credit score you can find some variances in the rates you are being charged.
At the time of this article you should expect a new car loan of 4 to 7 percent if you have good credit.
There are some cases where dealers who do in-house financing are charging from 18 to 28 percent interest, which is really high.
Want to learn more?
- It’s not all about making a car sale today!
- Can a car loan help improve my credit rating?
- Visit the JFR Cars Website
- Visit the JFR Cars Bankruptcy Center
- Frequently asked questions about buying a car after bankruptcy
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