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Actual auto lending rates in the United States

The interest rate is an important indicator of car lending. What do different companies have on offer? What to pay attention to while making a choice?

Other types of car loans

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Search for new and used cars

Financial costs can be an obstacle for purchasing a vehicle. Many consumers cannot immediately pay the total amount of money for a new car. A car loan can help to solve such a problem. This option splits the car price into monthly payments.

It is worth finding a low interest offer. Thanks to it you can obtain good savings. If you already own a car you can reduce payments by refinancing at a reduced interest rate.

Important! Rates in the car loan sector are unstable and need to be tracked.

The amount of the monthly payment depends on the charge of interest. With a low rate you can save several thousand dollars.

Optimal credit rating

If the customer’s rating on a new car is or exceeds 719 and on a used one is 655 it is possible to get the lowest interest rate.

Note! If the rating is below these values a customer can also be given a beneficial rate.

What is required for a beneficial interest rate in auto lending?

Customers with a low credit rating (approximately 500) are offered fairly high interest on a car loan. Appropriate actions have to be taken and your performance should be raised.

Interest rates differences for new and used vehicles

Loans for new cars usually have reduced rates and increased for used vehicles. Lenders consider a new car to be more reliable as they have a lower risk of breakdown.

A new car has a predictable price for resale what cannot be said about a used one. Due to that it has a low interest rate.

Best rates for car loans

A suitable vehicle is found, necessary studies have been carried out, test drives were done. Payment is still to be made. Is the customer ready to look for the best car loan offer as it was with the car?

Loan payments are to be made for several years. So you should not sign the first available contract. You’d better study different companies’ offers and compare them. By this way you can choose the most beneficial rates.

A competent approach to this case can save you several thousand dollars. And a calculator of debt payments is a useful tool as it will show the price of a new car.

Capital One

Make the transport acquisition easier. Apply for preliminary loan approval online via Auto Navigator. With its help you can buy a car while lying on the couch. This method is less time-consuming than going around to car dealerships and is the most convenient way if you have already chosen the brand and the specific model.

Pre-approval is a soft way of issuing a loan. It doesn't affect the account. All you have to do is to print out the approval paper and take it to dealers. It enables to make a car reservation with affordable price.

  • 3.59 % per annum;
  • minimum loan size: 4 thousand dollars;
  • Feature: the Auto Navigator program simplifies the purchase;
  • Advantage: The service is ideal for simplification of a loan pre-approval.

Carvana

Carvana suits to customers who have a bad credit record. It has no rating requirements. Car loans are issued to people with annual income from 10 thousand dollars and not having bankrupt status. But the service does not have joint signatures. That means that the buyer cannot attract relatives or acquaintances to obtain approval if the consumer has been refused to get a loan.

Important! The company grants loans for vehicle purchase only on its website. For buying a car at another company you need to look for a different lender.

  • 3.90% per annum;
  • minimum loan size: no threshold;
  • Feature: low loan qualification;
  • Advantage: Convenient to purchase online.

Consumer Credit Union

Credit unions allow you to get a loan for a car purchasing with a low interest rate. However, almost all such companies require clients to belong to a workers' union, serve in the military or live in a particular state.

Important! You have to pay 5 dollars to join Consumer Credit Union. This amount will remain on a saving account.

For getting a car loan approval your rating must be at least 640 points. But the union charges less interest than other listed options. So, if you want to get the lowest rate you need to increase the rating and join the CCU.

  • 2.69% per annum;
  • minimum loan size: 250 dollars;
  • Feature: services are available in all states;
  • Advantage: The company is suitable for borrowers with reduced credit levels.

LightStream

This company is a part of SunTrust Bank. It provides loans for vehicle purchase. People with good rating can get low rates. In case you find an offer with identical conditions from competitors LightStream will reduce the rate by 0.1%.

The company is engaged in rapid auto lending, contributes funds on the day of circulation. There are no penalties for early debt payment so you can make a payment at any convenient time.

  • 3.49% per annum;
  • minimum loan size: 5 thousand dollars;
  • Feature: a client should have a rating of 660 points but an opportunity to use a joint signature is available;
  • Advantage: Offer is optimal for consumers with a positive credit record.

OneMain

OneMain is a company for customers with an insufficiently high credit rating. Rapid loans are provided. This is the option with the highest interest rate in the list but funding is carried out on the day of application.

  • 18% per annum;
  • minimum loan size: 1,5 thousand dollars;
  • Feature: funds are transferred within 24 hours;
  • Advantage: Suitable for new borrowers.

U.S Bank

It is a traditional financial company. It combines car loan options and competitive rates. The Bank offers not only loans for new and used cars purchase and refinancing but also loans for the purchase of used cars from individuals.

Important! Interest charges are the same for new and used vehicles while most other companies differ them.

  • 4.56% per annum;
  • minimum loan size: 3 thousand dollars;
  • Feature: no down payment required;
  • Advantage: The bank is optimal for purchase from private sellers.

Correlation of interest rate and of credit rating

Creditors have their own characteristics and methods of setting interest rates. Anyway, loans rating is a significant feature. Low-performing borrowers will not be offered the best rates.

Note! There are companies which set beneficial interest rates for customers with a negative credit record. Therefore, no need to be upset, you just need to look for the optimum alternative.

Consumers with high levels (but not more than 800 points) get the most profitable offers. Lenders use different evaluation methods. It is difficult to say what is a target of a particular company.

Note! Borrowers are divided into categories by points amount. For example, people with a level of 740—800 will be offered one type of interest rate while people with a level of 700—739 — another one. In this case it doesn't matter how many points a person has - 740 or 780. But if the figure is 739 the borrower falls into the lower category. It has a higher although only 1 point is missing for moving to the next level.

Low annual interest is the most significant criterion for many borrowers as people want to save money. It is also important to clarify fees and conditions. Otherwise, a beneficial deal can appear to become a financial horror.

All transactions are accompanied by commission fees. However, they can significantly reduce money accumulation. In that case, it is better to find another lender. If there are no offers other than with a high annual rate then it is recommended to raise the rating and make a refinancing of the car loan.

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