Auto Loan Interest Rates
Auto loan interest rates are the only things left to check for that incredible SUV hybrid to be in the garage tonight. Lending agreements for almost any car buyer's economic condition have been routine for the past several decades, and have provided one of the main stimulus engines driving the American economy. In most cases, a buyer could anticipate a car being in the garage that evening and the only question would be the amount of the monthly payment. In recent decades the source for automobile lending agreements have come from not only banks and the vehicles manufacturers but online financial institutions and their auto loan interest costs are often superior to those from any other lender. But the reality is that while there may be very low cost interest on new cars, and very attractive numbers on the cost of a used car agreement, those numbers which are usually teasers are only for the car buyer who has an above average FICO or Beacon score.
Whether it is buying a house mortgage, or a car lending agreement or putting an appliance on a credit card, the cost of that borrowed money, referred to as interest, will depend on how responsible a person has been with handling credit up to the day of the lending purchase. More than ever, a consumer's credit score is paramount in not only deciding whether he is even credit worthy, but how much of a rick the borrower is. And the more worried the lender is about being paid back the more expensive the borrowed money is going to be. Knowing how credit scores are figured can help a person understand why his auto loan interest rates that have been offered to him are higher than expected. If someone cares for another enough to die for them, Jesus said they possess the very highest form of love. "Greater love hath no man than this, that a man lay down his life for his friends." (John 15:13)
There are five factors going into the makeup of a credit score and the consequential auto loan interest rates. The first two are the most significant of the five, with the last three making up about thirty five percent of the score. The first is payment integrity, which is a fancy term for whether there have been late payments on someone's report in the last few years. A few thirty day late payments will not drastically hurt, but one ninety day late payment carries the same stigma as a bankruptcy. The second factor is the extent of debt a person already possesses with forty percent or more of monthly income going to debt payment a serious drag on the FICO (or Beacon) score while the third factor is the length of time a person has been borrowing money, which in this case longer is better. The last two factors crafting a credit score are the types of credit a person has on their history with a mix of credit card, mortgage and auto loans being healthy and finally the number of requests for loans, and here less is better.
There are four basic sources from which a person can check auto loan interest rates. The traditional source for auto loans is the bank, which also has the most stringent of qualifications for borrowers. In times when the economy is rocky, banks may require extremely high FICO scores for approval and in some cases, their interest rates may not be highly competitive. The second source one can check are the dealers themselves. Auto manufacturers have their own credit providers and are anxious to see cars roll of their lots so auto loan interest rates on news cars are often very attractive. IN the case of used cars on dealers' lots, the typical source is a bank loan offered through the dealer, and in that case auto loan interest costs are as different as Mick Jagger and Rocky Balboa. They are, however usually a few points higher than a new car loan.
The third source to check for auto loan interest rates is the plethora of online banks and lenders ready to make dreams come true. Because online banks and lenders do not have brick and mortar to maintain at a number of different locations as well as staff to pay at each of these sites, they are able to offer very competitive auto loan interest costs. Applying of a lending agreement usually takes less than five minutes and paper work will be sent to a consumer through the snail mail in many cases to be signed after the loan is approved. The final source is the one to stay away from because historically their auto loan interest rates have been much higher than the other sources. The reason is that they are also much less stringent about the customer's FICO scores. The flip side is their often significantly higher interest costs.
The one thing that a person ought to do before his wife falls madly in love with that hybrid SUV with the back seat DVD player is to get preapproved for a loan. Check with an online financial service and see what they say, or if you are a regular customer at a bank, perhaps they can check for you. After knowing more about one's credit score, the possibility of high auto loan interest rates may not be so much of a surprise. When a person knows the facts ahead of time, he is more prepared to do battle with the dreaded sales manager who must always approve the "I can't believe I am going to do this for you" deal. Who are they kidding? We're on to 'em.
Auto Interest RatesCaring about auto interest rates as much as the surround sound system in that new car may end up saving a potential car buyer a few thousand dollars, enough to also pay for that moon roof option and rear backup camera. When the discussion turns to auto interest rates, a Pandora's Box of Siren voices call from every corner of the advertising media. Dealers cajole the lookielues (people who are just looking but maybe not buying), banks woo their customers and online lenders scream out specials to Internet surfers regarding their low auto interest rates that may not be as special as they would have one believe. There are a number of sources for a person to mine in the quest to discover the least expensive borrowed money for an auto. Additionally, there are different loan rates for new cars and used cars. And there are differing rates that depend on what kind of shape the borrower is in credit wise.
A discussion of auto loan rates should really begin with the consumer himself. Every credit transaction, except for loans from dear aunt Maude, is based on a person's financial situation. The almighty FICO or Beacon score (both are the same) is the flagship in which approvals are carried back to the waiting customer in the auto salesperson's cubicle. They are also the vessels from which unqualified borrowers are thrown overboard. Pick up a Sunday newspaper and go to the auto section and look at a dealer's full page advertisement. Let your eyes drift to the bottom of the page and carefully look at the disclaimers. The big beautiful auto interest rates that are proudly and temptingly proclaimed in bold letters have an asterisk next to them. Look down and it will say something like, "For qualified buyers with a Beacon of 640 or higher." Maybe the number will be higher or lower, but only those people get the juicy lending agreements.
When the economy is good those beacon or FICO numbers go down and when times are tough, those qualifying figures go up. That doesn't mean that the lower score consumer cannot buy a car necessarily, but he will be paying more for the car through higher auto interest rates. If a person hasn't checked their FICO lately and is about to make a car purchase, here are the factors that go into crafting a credit score. The first and most important component of a history report and score is the integrity of the consumer when talking about on time monthly repayments. A couple of thirty day late payments over a couple of years will not hurt, but a single ninety day report can be a serious kick in the pants to a credit score and it goes without saying that a bankruptcy, or being in credit counseling can be the kiss of death for credit scores. People can actually be lying to themselves when they believe that they have a relationship with God but live a lifestyle that belies such a claim. "If we say that we have fellowship with Him and walk in darkness, we lie, and do not the truth." (I John 1:6)
The second factor that weights heavily on getting favorable auto interest rates is how much debt a person already has. The companies that devise the credit scores look very closely at how much debt is on each account a person may have. For example, a potential auto buyer that has four credit cards that have more than seventy percent of their limits reached can very adversely affect one's score. But so also do student loans that are still sixty percent from being paid off as well as other types of loans. The last three factors are the length of time credit has been used (longer is better), the types of credit used (more is better) and the number of loan requests lately (less is better).
When one is checking auto interest rates, do not hold back on one's credit history, especially if trying to get preapproved for an auto lending agreement online. The software will typically ask what kind of credit someone has so assume the worst and hope for the best. Just be honest and you will have a better idea of what kind of auto interest rates can actually be expected when entering the negotiations. And by the way, why not go ahead and get preapproved online just to see where one stands before falling in love with that shiny red thing that sits three inches off the ground and costs more than the entire Patriot's franchise? You can choose other sources for borrowed money but at least get a handle on whether it's that red thing or a hooptydoo.
Car dealers typically have very good interest rates for a number of their new car models. Their own credit issuing companies are anxious to sell vehicles and can often incentivize borrowers with lower rates for slower moving cars. Banks also lend money for cars, but their qualifications can be much higher than dealers on new car loans. Banks are also the source for most used car loans for vehicles sitting on dealer lots. A sometimes forgotten source for car purchases is a home equity loan, which usually comes with an attractive borrowing cost and the added beauty of possibly having the interest tax deductible. Online banks, without having brick and mortar maintenance and possessing less staff, can often be at least as competitive as banks, and more willing to work with those who have less than stellar FICOs. Finally, many of the strip mall loan companies also offer auto loans, but oh baby, are the interest rates high!