How Are Car Loan Rates Calculated?
Car loan rates are based on your credit score. Generally speaking, the higher your credit score the lower your rate will be.
Your rate will fluctuate based on who you get your car loan from and where you live, but here are some rough estimates of what kind of car loan rate you can expect to get.
If you have an excellent credit score (740-850) you can expect a rate of around 3.2%. For an average credit score (680-739) you can expect a rate of around 4.5%. And if your credit score is under 680, your car loan rate could be anywhere from 6.5 – 12.9%.
Why Do Car Loan Rates Change Based on Your Credit Score?
Your credit score is a measure of the risk involved in giving you a loan. People with a high credit rating are seen as having low risk, while people with a low credit rating are seen as having high risk. This is why car loan rates change depending on your credit rating. It helps protect the lender.
If you have a low credit score it means you’ve likely had trouble paying off loans in the past. By giving you a higher car loan rate, the lender mitigates some of that risk by collecting a higher fee.
Conversely, if you have a high credit score it means you’ve successfully paid off all or most of your loans. The lender can feel confident that you’ll pay off your car loan, so they’ll give you a lower rate because there’s less risk.
Find Out Your Credit Score Before You Get a Car Loan
Before you start looking for a car loan it’s a good idea to know what your credit score is ahead of time. This way you can be realistic about what type of car loan rate you can get. Services like Equifax and TransUnion can provide this for you.
This will also give you a chance to review your credit history before applying for financing. If there’s any information that’s incorrect or out of date you can work to get it resolved. This might raise your credit score and allow you to get a better car loan rate.
If you your credit score is low, you might choose to wait until applying for a car loan. In the meantime, work on paying all your bills on time, and paying off any outstanding loans. Over time, your credit score will increase, allowing you to get a better rate on a car loan.
How to Get the Lowest Car Loan Rate
Other than making sure your credit rating is as high as possible, the best way to make sure you get the lowest car loan rate is to shop around. Not every lender will offer you the same rate, so don’t settle for the first one you’re offered.
One way to do this is to visit several different institutions yourself. Banks can pre-approve you for a car loan, but they only have access to their own rates and won’t be able to tell you what other lenders are willing to offer you. So, you’ll have to visit a few different banks to see which one is willing to give you the best offer.
A better solution is to go to a finance company. These businesses specialize in helping people get financing. They also have access to many different lenders. That means by visiting one finance company you can get rates from many different lenders and choose the lowest one available.
Many finance companies offer online loan applications as well. You can apply online and usually get approved for a loan that same day. And because they have access to multiple different lenders you know the rate they give you is the best one you can get.
Find Our Your Car Loan Rate at Auto Loan Services
Auto Loan Services is a finance company that specializes in car loans. Our goal is to help people get the lowest car loan rate possible. We believe everyone should be able to secure car financing that works with their budget.
We have access to dozens of different lenders. When you apply for a loan with us we’ll reach out to our many different partners and find you the lowest rate available. More often than not we can get you approved for a loan the same day you apply so you can start shopping for your new car.
Even if your credit rating isn’t the best we still have plenty of options to help you get a car loan that will work for you. We can partner you with lenders that deal with people who have low credit ratings. They can help you secure financing and start you on the path of rebuilding your credit rating.
Not only can we help you get approved for a car loan, we can also help you find a new vehicle. Through our partnerships with local dealerships, we have access to an inventory of over 5000 vehicles. The moment you get approved for a loan you can start browsing and choose the car that best suits your needs. We’ll even deliver it right to your door. If you’re not completely satisfied with your new vehicle you can return it within the first 30 days and choose another one.
Are you ready to find out what kind of car loan rate you qualify for? Fill out our application today to get the process started.