Many people are confused why one person is offered one rate for Auto Loans Altoona PA, while someone else is offered a completely different rate. There are many factors which affect the rate that a person is offered, and often times, people do not realize what affects the rates. Here are just a few of the factors that can cause your interest rate for auto loans to be higher or lower.
Your Credit Score:
The number one factor that can affect your interest rate for Auto Loans Altoona PA is your credit score. If you have a high credit score, your rate will be lower. If you have a low credit score, your rate will be higher. This is because those with a low score are deemed to be at higher risk for defaulting. They have a history of making late payments or not paying off their loans and credit card balances. In order to justify loaning to these people, finance companies have to charge a higher interest rate. Those with a better score are deemed to be less risk, so finance companies can offer them better rates, since odds are, they won’t default on their loan.
The Length of the Loan:
Many people do not realize that the length of the loan can affect their interest rate. They know that the longer their loan, the more in overall interest they will end up paying, but few realize that longer loans generally have higher interest rates attached to them. This is because there is a lot of risk involved with financing a car for more than five years. Even those with good credit will have a higher interest rate if they want to finance a car for longer than five years. Therefore, when possible, look for a car that you can finance and pay off within five years.
Who You Finance Through:
The last thing that can affect your interest rate is who you decide to finance through. As such, it is always important to price shop and find out what rates are available to you. Typically, credit unions offer the lowest interest rates, with in house auto financing having some of the highest rates.
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