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Auto Loan Interest Rates

Purchasing a new or used vehicle involves major decisions that need to be considered before any final decision is made. Research needs to be done, with full dedication, in all aspects of buying a car including; negotiation tactics, financing, insurance, and your credit history.

If your credit history is damaged, be prepared, you will not qualify for a zero-percent or low interest rate. You will be considered a risk to lenders so the interest rate will be higher than someone with picture perfect credit. Buyers with damaged credit can pay rates as high as 20% for used cars . Even higher rates have been reported by the Better Business Bureau.

The auto loan interest rates that you qualify for reflect to the dealership (or financial institution) the amount of risk they are taking to finance you. Banks and credit unions want a down payment. They regularly require 20-25 percent for a new car or used car loan. Banks and credit unions have a specific amount, depending on the retail value of the car, they will finance you. This is called a Loan Value or Finance Value. This stipulation does allow you to see if the seller is asking for an honest selling price.

According to NADA, finance companies have increased interest rates by 5 percent. The interest rates will climb when there are promotional offers or incentives. Banks and credit unions have increased the rate up to as high as 6.5 percent.

Remember, going out and just buying a car is not that easy. Take the time to investigate auto loan interest rates from many different sources to ensure you the lowest rate possible. Get rates from all possible sources which will be a vital source of information before you sign any financial contracts.