A car finance loan is helpful if you don’t have the money to pay for a vehicle entirely up front. In order to use a car loan financing package, however, you’ll need to be able to pay back the loan in monthly payments over an extended period of time. The lowest car loan rate will be the one that has either the lowest interest percentage or the shortest term; to determine how much you’ll actually have to pay, you’ll need to consider factors like your credit score and down payment.
The lower your credit score, the better the chance is that you’ll have to pay a hefty premium in order to get an auto loan. This either involves a sizable down payment or, if you can’t afford that, a massive interest rate. Credit scores below about 600 usually have the highest interest rates (around 26% in most places). Higher credit scores will earn better interest rates, all the way up to the highest scores which often have an interest rate of 10% or less.
The amount of money that you’re able to put down toward the purchase of a car at the time that you sign for the loan will also have a big impact on the total cost of a car financing project. If you can put down as much as 30% of the total cost of the car at once, you’ll generally find that the interest rates will stay at 17% or lower. However, the less that you’re able to put down, the more money that you’ll ultimately spend on interest as you work to pay off the loan. Some no money down interest rates are astronomical, and they often work out ways to penalize you heavily (if you attempt to refinance the loan, for instance).
Ask a leasing agent or negotiator for more specific advice to your situation.