It’s no surprise that car buyers want to save as much money as they can when making a vehicle purchase. After all, the most frequently searched vehicle price range is $5,000 or less. Often, you can take advantage of car dealership specials or purchase pre owned vehicles rather than new models to save some money. Of course, vehicle financing can also help to make payments more feasible. But what exactly determines the amount of interest you’ll pay on your auto loan? Let’s take a closer look at the factors that are typically taken into account.

How Car Loan Interest Rates Are Determined

• Credit Score: Your credit score does play a role in loan approval and loan interest rates. That’s not to say you won’t be able to secure vehicle financing if your credit is poor, however. It just means that your interest rates are likely going to be higher than what someone with excellent credit would be offered. The upside of this is that by making your loan payments on time, you can improve your credit score. In many cases, lenders will look at your credit history and may offer you a better auto loan interest rate if you’ve made those payments on time in the past.
• Lender Choice: Your choice in lender can have a big impact on the amount of interest you’ll end up paying on your auto loan. You have a few different options here, as you can choose to finance your loan through a bank, a credit union, or directly through your dealership. In many cases, you may be able to receive an interest rate with more agreeable terms through car dealership specials than you might get from a bank or credit union. It pays to find out as much information as you can before making a final purchase decision.
• Type of Vehicle: It might sound counter-intuitive, but new vehicles actually come with better interest rates in most cases. It really comes down to resale value. Used cars experience a more substantial value depreciation, which means you may end up paying a higher interest rate in the end. That doesn’t necessarily mean you should always choose to buy a new vehicle over a pre owned car, but it is something to keep in mind. Don’t forget that new cars are going to cost more in general, so it probably won’t save you money to automatically opt for a new car.
• Size of Down Payment: If you’re willing to put more money down for a loan, the amount you owe on the vehicle will be less overall. That, in turn, will reduce the interest charges you’ll have to pay. You shouldn’t put down your life savings in order to lower your interest rates, but it’s generally a good idea to put down 10% of the vehicle’s selling price or $1,000, especially if your credit is poor.
• Loan Terms: Keep in mind that the longer you have to pay off your loan, the more money you’ll end up paying in interest. Longer loans equal higher interest rates. The flip side of that is that shorter loan terms come with both lower interest rates and higher overall payments. You should aim to make your loan terms as short as possible while ensuring that these payments will be financially feasible for you.

Now that you know a bit more about how your auto loan approval and rates are determined, you can take steps to improve your credit score and make adjustments in other areas (like your vehicle selection) to obtain a loan with better terms. It won’t hurt to make good use of car dealership specials either, as these can allow your payments to be more affordable without sacrificing your ability to provide your own transportation. To learn more about our available vehicles or the car dealership specials we’re currently offering, please get in touch with us today.

With the price of a new car averaging over $35,000 in the United States, it is no wonder that so many people are on the hunt for more affordable options. Used auto sales have risen over the last seven years, and they are not showing signs of slowing down any time soon. If you are searching for low cost cars, depend on us. We can even assist with an auto loan, getting you set up right in no time.

Know Your Price Range and Stick With It

Chances are you are looking for something within a specific price range. Know ahead of time what exactly you can afford and whether or not there is any wiggle room, should you find a good deal on a more expensive option.

Sticking to your budget is a key part of used auto sales and negotiation. Buying something you ultimately cannot afford will not benefit you at all. Stick with a certain price point, and you will be a lot happier down the line.

Do Your Research

Any pre owned car will likely have a history of around three owners, and the average age of any vehicle in the United States right now is around 11 – 12 years old. Do your research, so you know exactly what you are getting out of your vehicle and run a CarFax report to ensure you are not missing a thing.

That being said, it is important to note that around 10 million crashes occur unreported every single year, so your CarFax may not be telling you everything. All in all, research is important, but do not hesitate to go with your gut if something does not feel quite right.

Consider Your Needs

You may have found a great deal on that sports car you used to love as a kid, but is it really the practical option for your family of five? Or maybe that gas-guzzler is catching your eye, but is it a good choice for your long work commute? Probably not.

If you are buying a used car, money is likely not something you have a lot of flexibility with, so figure out exactly what you need, and make sure you are getting something that will bring you the most benefits for your specific lifestyle.

Rely on Our Team

Still have questions or feel uncertain about where to start? For the best used auto sales around, count on us every step of the way. Our team is eager to help you out.

Although many drivers can’t resist the allure of a sparkly new car, the data doesn’t lie: there were roughly 40 million sales of used vehicles in the United States during 2018. But why exactly are used auto sales so popular? In many ways, they make car ownership more accessible to the masses. And these days, you won’t take the risk of ending up with a lemon when you visit a used car dealer. In today’s post, we’ll take a closer look at three key reasons why pre owned vehicles often win out over new car sales.

1. They’re More Affordable: To put it plainly, you’re more likely to get a great deal when you buy a pre owned car than you are when you buy a brand new model off the lot. Not only will the sticker price be less, but you’ll also end up paying less for insurance. Plus, you won’t have to bear the financial burden of depreciation. The original owner of the car will take that hit, which means your used car will retain more value comparable to how much you pay for it. Ultimately, this makes owning a car a reality for countless Americans who can’t afford the high costs associated with many new vehicles.
2. They’re More Versatile: When you buy a pre owned car, you’ll open up a whole world of vehicles that you’ll suddenly be able to afford. These cars are in excellent shape, but they’ll also be within your price range. When you buy a new vehicle, you may find you’re limited in the makes and models of vehicles you can feasibly purchase. But when you consider used vehicles, you’ll probably discover that you’ll have access to both a higher quality and quantity of vehicles. You might be able to find a car in a unique paint color or have those high-tech features you’d otherwise have to leave off the list. You’ll benefit from a greater amount of versatility in your vehicle selection when you look for a used car.
3. They’re More Flexible: This isn’t to say the cars themselves are more flexible — though their financing may be. When you buy a pre owned car that’s truly affordable, you may be able to opt out of needing a loan altogether. In other cases, you might not have to pay as much money down or can negotiate a shorter loan term than you might otherwise be offered. And with buy here pay here options, you’ll be able to secure your vehicle on the spot. In the end, that means that you’ll be able to get on the road more quickly and start enjoying all your vehicle has to offer right away. What’s more, many used car loan terms will make it so you’ll be less likely to owe more on the car than its total worth — a fact that can be devastating when the owner of a new vehicle deals with an accident or a theft. Between the lower cost and the flexible financing, you’ll be able to work out a deal that actually works for you.

Ready to buy a pre owned car for yourself and see what all the fuss is about? We’re here to help. For more information, contact us today.