![]() ![]() To increase your chances of landing a good interest rate on a used car loan, follow these tips. How to get the best rate on a used car loan The better your credit score, the lower the interest rates you’re likely to secure. A low credit score has the opposite effect and indicates that you may make late payments or even miss them altogether. Your credit score is used by lenders to determine how responsible you are when you borrow money.Ī high credit score shows (among other things) that you have a history of on-time payments and are more likely to repay your loan. When you apply for a used car loan, the lender will consider your credit score, just like they would with a credit card or personal loan. Higher used car loan rates help protect lenders against decreases in your vehicle’s value. This is because older vehicles aren’t as reliable as newer vehicles, more costly to repair, and therefore riskier for lenders. ![]() For example, if your credit’s excellent, you can expect an average used car interest rate of 5.99% versus a rate of 4.75% for a new car loan, according to Experian. If you compare used car interest rates to new car interest rates, you’ll find that they’re higher. The following table shows the average interest rate by credit score for Q4 2022, according to an Experian report. A lower credit score, on the other hand, will likely force you to settle for a higher rate, which will increase your overall borrowing cost. In general, a higher credit score leads to a lower interest rate, which translates to hundreds or even thousands of dollars in savings. Your credit score is one factor that will impact the interest rate you receive on a used car loan.
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