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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.
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.
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.
- 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.
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.
- 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.
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.
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.
