If you're interested in buying a car and using a loan to finance the purchase, you should take the time to investigate the average interest rates lenders charge. These rates change over time and can differ considerably among lenders, so taking the time to shop around may reap significant financial rewards.
New-Car Loans
New-car loans make up an important part of a lender's loan portfolio. The annual interest rates (APRs) lenders charge for these loans, like all loans, differ over time as the general economy changes and the interest rates offered by the Federal Reserve rise or fall. Bankrate.com reports that as of March 31, 2011, the average three-year, 36-month new-car loan was 4.28 percent APR.
Used-Car Loans
Used-car loans typically have a higher average interest rate than loans for new cars, even if the amount of money borrowed is the same. Bankrate.com reports that the average national rate for a 48-month used car loan was 5.41 percent as of March 31, 2011, while a comparable new-car loan came with an average interest rate of 4.38 percent.
Loan Length
Another factor affecting the interest rates on car loans is the length of the loan. A three-year, 36-month loan, for example, typically comes with a lower interest rate than a five-year, 48-month loan. For example, take a credit union that offers a range of loans from 36 months to 84 months. The lowest interest rate for a 36-month new-car loan will be lower than the lowest rate for an 84-month new-car loan.
Other Factors
The average loan rate also differs based on your credit history. For example, take a credit union offering used-vehicle loans with interest rates ranging between 3.5 percent and 15 percent. Only borrowers with excellent credit histories qualify for the lowest interest rate loans, while borrowers with bad credit can expect much higher interest rates.
0 comments:
Post a Comment