Unfortunately, there isn’t a single answer to the question of what your interest rate will be, as what you qualify for depends a lot on your credit and the lender you work with. However, there are a number of ways to determine where your interest rate is likely to be near. Let’s take a look further …
Know where your credit is
Rather than starting your car buying journey by asking yourself what will be your interest, why not start with “what is your credit like?” When you know your credit, you can start looking for the lenders that best suit your needs.
To start, get a copy of your reports and score by visiting www.annualcreditreport.com. Every 12 months, you are entitled to a free copy of your credit report from each of the three major credit bureaus: TransUnion, Equifax, and Experian. You can get your credit score at the same time, although this may incur a fee.
Now that you know what your credit rating is and what’s on your credit reports, you need to know what to do with that information.
What does your credit score range mean?
Credit scores are divided into ranges grouped by level. This is a tool that a lender uses to determine risk. The higher the credit score, the lower the risk. There are more than one credit scoring model available, but the one most commonly used by lenders is the FICO credit scoring model.
FICO scores vary between 300 and 850, with credit scores falling into the following levels:
- 300 to 579 – Bad. If your credit score is within this range, you are considered a high risk consumer and you may have difficulty obtaining credit from a traditional lender. Borrowers who fall into this category tend to see the highest interest rates, sometimes even reaching 20% or more.
- 580 to 669 – Fair. Credit ratings in this range are lower than the national average and considered subprime. You may run into loan slowdowns, but you should be able to find a loan through non-traditional means, such as a subprime lender. Subprime borrowers are generally eligible for loans with above-average interest rates.
- 670 to 739 – Good. If you fall within this range of credit scores, you are considered an unprivileged consumer. You may or may not qualify for a loan from a traditional lender, and are likely to see higher interest rates than consumers with better credit scores.
- 740 to 799 – Very good. Credit scores falling within this range are considered low risk for lenders. These consumers are known as blue chip borrowers, earning them above-average interest rates when they apply for credit.
- 800 to 850 – Exceptional. These scores are the cream of the crop and considered the least risky borrowers. This level of credit is called super prime, and borrowers in this range qualify for the best interest rates and the best financing arrangements.
Using this information, you can research the average interest rates online for people in your credit rating range. At this point, it’s also a good idea to start researching the vehicles that best suit your driving needs and start budgeting for the car.
If you need assistance to increase your credit score, we can also help you.
Auto financing is impacted by more than interest rates
While your interest rate is an important factor in determining how much a car loan will cost you, remember that it is only one component that contributes to the overall cost.
Things like the year, make and model of the vehicle, the length of the loan, the down payment, and whether you are buying a new or used vehicle all have an impact on a car loan – not to mention the cost of ownership. of the vehicle itself, such as auto insurance, fuel, and maintenance.
Cars don’t come cheap, so make sure you know what you’re getting into before applying for a car loan.
Find a dealer for your needs
No matter where your credit score takes you, there is usually a dealer available who can help you. Sometimes it takes just a little research to find the right lender for your needs.
Here has Auto Express Credit, we work with a nationwide network of special finance dealers who have loan resources available to people in many types of credit situations including poor credit, no credit, and bankruptcy.
To connect with a local dealership who can help you with your car buying situation, simply complete our quick and free form. auto loan application form to start now.