Auto Financing: Five Tips To Get Low Interest Rates And APR

Understanding auto financing is essential when buying a vehicle. One of the most significant factors in the total cost of your vehicle will be the interest rates and annual percentage rates (APRs) you secure. Securing a lower interest rate can save you hundreds, if not thousands, throughout the duration of your loan. In this article, we’ll explore five tips to help you secure low interest rates and APRs, ensuring you make a financially sound decision when financing your vehicle.

1. Improve Your Credit Score

Understanding Credit Scores

Your credit score plays a vital role in determining the interest rate you will receive on an auto loan. Lenders rely on credit scores to determine your risk as a borrower. Generally, higher scores translate to lower interest rates. Here’s a breakdown of how credit scores affect loan terms:

  • Excellent Credit (750 and above): You’ll typically qualify for the best rates.
  • Good Credit (700-749): You’ll likely receive favorable rates, but not the lowest.
  • Fair Credit (650-699): Expect to pay higher interest rates, as lenders may see you as a higher risk.
  • Poor Credit (below 650): You may face significant challenges in securing financing, and rates will be considerably higher.

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If your credit score isn’t where you’d like it to be, consider taking these steps to improve it before applying for an auto loan: