Interest Rates and Auto Financing Get Better Interest Rates

How Interest Rates Affect Your Financing

Amanda Hart

Rates matter a lot

If you have ever had a credit card or financing on a car before, you know how greatly interest rates can affect the amount of money you will pay in the long run. If you don't realize this, you need to find out fast!

We can help you learn everything you need to know to not only get better interest rates, but you will also get better overall financing that will save you a lot of money.

Interest rates are often overlooked, and worse yet, many people feel like the first offered rate they get is the only thing they qualify for. Knowledge isn't just power, it is also extra money in your pocket in this case. Shopping around for the best interest rates is an absolute must when you're shopping for car sales and financing.

To show how important interest rates are, say you are trying to get a loan for $10,000. With a 10% interest rate over a three year loan, you will be paying a grand total of $11,616. With a 5% interest rate, a difference of just 5%, you will pay $10,789. That makes a huge difference in the long run.

How rates are determined

There are several different factors that go into determining the kinds of interest rates you will qualify for. Taking control and improving these factors and shopping around your options will put you on the easy street to paying less for your new car.

The most prevalent factor when lenders are sorting out your financing is credit scores. Credit is a numerical value assigned to make it easy for lenders to accurately judge how big of a risk you are to lend to. The worse your credit scores are, the more interest lenders will have to charge to make the investment worthwhile to them.

It can also matter greatly where you shop for your financing. Credit unions usually offer the best interest rates of the national lenders, banks come in at second place, and last are the in-house financing dealerships, who mostly cater to people with bad credit.

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