auto loan rates

Hector Milla asked:




Just like with other loans, your FICO score impacts your car loan as well. The higher your credit rating score is the lower your auto loan interest rate will be. One large error auto consumers make is looking at cars without knowing what their credit rating is and what types of financing they can receive. Many times auto traders lure consumers in with promotions involving funding that includes 0% basic interest rates and low monthly payments.

These promotions are very misleading. It is your responsibility to know your credit rating as well as all of the financial obligations if you have before you even start shopping for a car. What people don’t seem to pay attention to is that these low rates are really reserved for those individuals that have superior credit ratings and not for those who have poor credit ratings.

Another familiar credit score that you may have heard of is an enhanced score, or FICO Auto Industry Option. This is different from your normal credit rating. The major difference between this score and your standard credit account used to obtain an auto loan is that the rates depend on how you managed your prior vehicle loans. If you have a pre-existing bad rating, but you are creditworthy because of the way you dealt with auto loans in the past, you may be able to secure a loan with a much lower annual percentage rate. If you are a first time car buyer, or have no additional automobile funding on your credit account, you are usually not in a position to obtain these types of flexible car loan terms. You will have to build your credit rating in a methodical manner, and as you construct a positive relationship with lenders, your poor credit score will start to increase.

Auto lenders correct their interest rates based on a range of credit rating factors and features. If your score descends within a particular range of relative scores, you will be offered the going rate of interest for that range and that range alone. In most cases, interest rates fall about 4% for every 20 to 40 points that your rating goes up.

Regardless of what your FICO score is, what is important is that you know what needs to be done to increase it so that you can secure an auto loan efficiently and without much hassle.To speed up your process, you should try to pre-qualify for your auto loan online and get your funding worked out prior to shopping for the vehicle of your dreams. When you do this, you’ll know exactly how much you can afford to spend on your car and how it will affect you financially.

Gina