For the majority of people, buying a car in cash is not feasible due to the price of a new topping the average yearly wage of most Americans. In fact, the average price of a new car in the U.S. reached an all-time high in 2012 of a massive $30,748 according to TrueCar.com.
Finding and selecting the right auto loan is a smart and necessary option for a growing number of motorists from all kinds of credit backgrounds.
Car Financing 101
Car financing is an ever-growing area of credit in the U.S. and choosing the right finance deal is an important decision. Motorists need to do their homework in order to land the best car loan deal that they can. Research is paramount, but motorists should first be advised of some key aspects affecting the rates of interest for auto loans:
- Credit rating and financial history
Your credit rating will have a heavy bearing on the rate of interest you will be offer by a car finance company. This is because your credit history will be used by prospective lenders to determine the level of risk you represent in being loaned the money, as well as telling them how you manage your money.
There are now many companies that specialize in competitively rated car loans for those with lower credit scores, so the trick is to compare and research. PersonalLoansForBadCredit.net can help you get a comprehensive picture of what is available so that you can pick the best of the bunch!
- The term of the loan
In general, the shorter the loan term (time), the lower the rate of interest. This means that if you borrow the money for a shorter period of time, you will pay less for it in interest. This is suitable for those with a steady cash flow that can accommodate the higher repayments monthly. It can be a good option for those that want to see the loan paid down sooner.
On the other hand, if you have less cash to spare each month and want to have more comfortable repayments, it might be a wiser more to opt for a longer term with slightly higher interest but more manageable monthly repayments.
- New car or old?
Are you considering buying a bright, shiny new model or a pre-owned car? The age of the car you want to buy will also have an influence over the rate of interest your loan has. Be aware that, surprisingly, used cars usually attract a higher rate of interest that new cars.
- Your location
Auto loan rates are very different depending on geographical location in the U.S. In 2012, the National Automobile Dealers’ Association reported that Michigan has the highest interest rates for auto loans across the nation.
PersonalLoansForBadCredit.net can help source a wide selection of companies for you to cross-match local and national lenders.