Congratulations, you’re buying a new car! You know the terms of your auto loan are important and you’re all about getting the lowest interest rate possible. (Good plan!) But, did you know what determines that interest rate? A little knowledge… and a little planning… can save you money.
Interest rates are determined by a few key factors:
Chances are, you’ll be working with a bank, a credit union or the manufacturer’s financing service. Back in the day, most people thought that a bank or credit union would offer the most affordable financing. But now, most manufacturers aggressively compete for your business with zero percent financing – the lowest possible rate. The best advice? Check rates and terms with all three types of lenders.
New car? Used car? Old car? It all makes a difference. Typically, interest rates for new vehicles are the lowest.
The length of your loan.
In general, the longer the term of the loan the higher the interest rate. But now, many automakers offer zero-percent financing on terms as long as five years!
Your credit rating.
You already knew this one – the better the credit rating you have, the lower the interest rate you’ll be offered.
Your down payment.
The more money you put down toward the purchase, the less risk involved in granting you a loan and that also drives the interest rate down. So if you have the money saved for a significant down payment, it may save you money on your loan terms.
Our financing specialists at Hayes Automotive work with each customer to design a financing plan that suits their individual circumstances. We’re always happy to answer questions — even before you begin shopping for your vehicle. Call us today!