What are the Interest Rates on Used Cars Like?
Finance-savvy used car buyers keep one eye on the interest rates for obvious reasons. The actual price of the car is never what you actually pay. Interest rates get added on to the loan you take and the overall extra amount can vary anywhere in the range of $2,000 to $14,000 depending on a few factors. You will naturally want to stay in the lower bracket when it comes to credit interests. And that is why it is important to explore how used car lots on White Horse Rd, Greenville, SC, design their rates and the figures they charge. Before starting, it is also crucial to note that the interests are often decided by the market and top dealers do not place a number as per their whim.
What are the interest rates like?
You must already know by now that the interest rate charged on any credit depends on your credit score. This figure determines your risk of default and places you in the prime or subprime categories. Additionally, interest rates also vary with the timespan for which you take the auto loan. A higher span will increase the rate as the stretch is assumed to increase the risk factor.
On average, a $16,000 auto loan for a duration of 5 years is typically charged at around 5% for good credit holders. That is, if your credit score is 700 to 750 or above, you carry minimal default risk, and lenders willingly pay you the required amount. The average figure doubles if your credit score is below that. 600+ score holders are charged at almost 11% for that same loan amount. As evident, subprime credit score holders pay even more. The interest rate is around 18% to 28% for anything lower.
Here again, it is important to identify that the interest rates are average figures. Top buy here pay here car lots in White Horse Rd can go lower if you can pay a high down payment, show a modest income, or do not hold a high mortgage. Consider these figures as an idea to determine what interest rate can you expect while buying a used car.
Should you take a loan with a bad score?
A 28% average interest rate might naturally seem steep. And there is no simple way to build your credit score in a matter of months. But that cannot decide your need to buy a car. If you don’t have a good credit, your choices are limited. You can lower the overall payment by going for a cheaper vehicle or by paying high down payment at dealerships on White Horse Rd, Greenville, SC, where the quality will be backed by warranties. Combine with a decent down payment and a short loan span and you can finance your used car easily even with a bad credit score.
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