Car Loan Rates
Car loan rates, the often make or break deal in an auto being sold, really are the linchpin of a great amount of America's economy. It might be difficult to gauge how much of the average American's income is based on business either done because of car ownership, manufacturing cars, servicing cars or some related retail market, but it's not hard to imagine that it would be rather huge. So when the auto loan rates are low, the opportunity to keep America flourishing is more manageable, and when they rise or even credit money dries up, Wall Street quivers in its Guccis. And these car loan rates are often as varied as the people in the cast of Survivor. Three or four different new auto interest rates may be on one page of the Sunday newspaper, with each manufacturer offering their own loan costs, some applying to their entire inventory and some to particular models.
Because there are a number of sources for auto lending agreements, the interest rates certainly are varied. And of course, often the most publicized loan schedules are not necessarily the numbers that someone is going to actually get. When a real hard look is made at the disclaimer copy at the bottom of most Sunday car ads that take up the whole page for one dealer, the tiny micro print at the bottom of the page will disclose that a particular Beacon score must be met to qualify for such low rates. The Beacon or FICO scores are both the same number and are the results of what is revealed in one's credit history report. Car loan rates in good economic times are reflective of high confidence in even the consumers with rocky credit, and in the bad times usually put owning a car out of reach for many. "Glory to God in the highest, and on earth peace, goodwill toward men." (Luke 2:14) This passage is not a declaration by God that there would suddenly be peace on the earth because of Jesus' birth, as so many misunderstand, but rather that God was declaring an end to the war between Himself and sinful man, when a person accepts Christ as Savior.
Consider first new car loan rates that are often the most dazzling of all the lending agreements in the galaxy. It is not uncommon to find zero percent interest rates on some models for as much as five years, lowering the cost of ownership by as much as thirty five hundred dollars or more. And in lieu of taking the zero percent lending deal, a consumer may be offered that much off an already negotiated deal. So before assuming that the zero percent is the most desirable agreement, check the number to see if paying cash for the car and taking the rebates might not be better for the bottom line. The only place that zero interest rates are offered is through the manufacturer of the new car being considered. But if all the zero percent car loan rates conversation goes to one's head, realize that those deals are going to higher than average credit scores, and especially whenever there are economic downturns. So if one's FICO or Beacon is suspect, walk into that showroom with some fear and trepidation and know that the sweet deals won't become one's way in the near future no matter what the sign says on the dealer's front window.
Let's stop for a moment and just remind ourselves of the factors that go into making up one's Beacon or FICO. The first two are weighted quite heavily while the last three combined weigh about as much as one of the first two in importance. The first is one's payment integrity, and if there are very many thirty days late payments of any kind on the history report over the past few years, the score comes down dramatically. The second is the how much debt is on each credit account the borrower has. In other words, the closer an account is to the maxed out ceiling number, the more negatively it affects the report. The other three factors affecting car loan rates for the borrower are the length of the history report (this favors older people), the kind of accounts on the report (if there are installments loans, unsecured loans, student loans and mortgage, that's very good) and how many times applications have been filled out for credit in the past year or two (less is better).
If a consumer has very good credit, the car loan rates will always be favorable, at least in comparison to the one with a sullied history report. But for those who do have less than stellar credit histories, online banks do offer some competitive rates for car loan rates when the comparison is made with a local bank which has the highest qualification for the lending of credit. But care should always be made for the online offers because what you see is what you get isn't necessarily so. In fact, anywhere a consumer looks for borrowing privileges, understand the power of the teaser rate a person in the door. And one of the best pieces of advice is to get prequalified before launching out and finding that beautiful, gotta have it vehicle that is too much for the loan for which you can qualify. There is nothing more pitiful than weeping in the showroom.
New Auto Interest RatesNew auto interest rates are generally lower than used car interest rates especially if a loan is for an extended period of time. Today, car loans can be approved for up to 70 months with a few dealers offering even longer terms. The appetite for faster, sleeker luxury cars has caused many consumers to buy more car than they can actually afford on their current budget. Although a new car interest rate will be lower than a used model, it may not end up saving money for consumers who purchase blindly. In order to stay well within any household budget, many experts recommend that no more than 15% of a consumer's monthly earnings after taxes be designated to car payments.
Although new auto interest rates are commonly low especially with long term loans, there are several things that will help any consumer in receiving the lowest possible rate for an automobile. One rule of thumb is that car dealerships generally require higher interest rates than do credit unions, banks and other lending sources. Check with several loan companies as well as with the car dealership so that a helpful comparison can be made. Be careful about 'biting the bate' when it comes to choosing an instant rebate over lower interest rates. Consumers can end up spending more money than they realize when paying high interest long term loans even when a substantial rebate is given.
Monthly payments during an extended loan period can accrue thousands of dollars through interest charges which may cause the original rebate to pale in comparison. Making a substantial down payment on a new auto can drive interest down and make it possible to manage lower monthly payments. At least 10% down is helpful in pushing rates lower, but anything upwards of 50% of the total value can save many thousands of dollars over the loan period. Most lending sources are much more apt to offer good rates if they know there is already significant collateral in the new purchase. Consumers who have good credit histories are more likely to receive low new auto interest rates.
Credit histories can be checked through free online credit agencies as mandated by law. Everyone is entitled to one free credit report from each agency within the year. This provides opportunities for any consumer to know exactly what lenders will see when a credit check is run for any loan. This also provides an opportunity for anyone to make needed adjustments in their finances before applying for an automobile loan in order to receive the best new car interest rate. Everyone enjoys a new car and many times the purchase is made out of emotion rather than logic which has plunged many people into further financial troubles. "Commit thy works unto the Lord, and thy thoughts shall be established." (Proverbs 16:30)
In order to avoid this temptation, keep in mind a few tips when checking out the dealership showcase. Be prepared to lose approximately 40% equity in the new auto within the first couple of years even if a new car interest rate is low. Even though high end, luxury cars retain more equity for a longer amount of time, there is still some equity lost in just about every vehicle. Some consumers shy away from retail tag prices when they begin to see just how much they will loose in the first years of ownership. Subsequently, many owners prefer to let the first owner absorb the equity loss and they wait a year or two to purchase their dream machine.
This strategy can still provide for a relatively low rate on good credit for something just a little older than new auto interest rates allow. When negotiating any vehicle deal, try to limit payoff to no longer than 36 months. This strategy will keep any consumer's feet on the floor when looking into any new car interest rate options. For those who purchase a vehicle for 60, 70 or more months on a loan term, many find that their household finances are crunched for years. Then, the buyer ends up with an older automobile that has lost its value but they are still paying on it. If possible, it is much more advantageous in all respects to apply for a short-term loan in order to maintain control of personal finances.
Low new auto interest rates can be found at many dealerships both local and online. This allows customers to shop around for the best deal and naturally promotes competitive pricing among businesses. For anyone who thoroughly shops around, there is usually a better deal than the last one out there somewhere. Compare among a minimum of three lending sources for the best loan terms. Many times lenders have a margin of flexibility to operate from and a patient consumer can usually find a great deal.