What Is a Good Interest Rate on a Car Loan | Speedway Chevy

When you’re on the hunt for an auto loan for your next vehicle, it’s important to consider your interest rate. You want to get the best interest rate possible because that means you’re paying the least amount of interest on top of what you already owe for the loan.

In this guide, we at Andy Mohr Speedway Chevy will give you a detailed overview about car loans interest rates. Shoppers in Indianapolis, Fishers, and Speedway should read ahead to learn more!

 

Factors That Affect Your Interest Rate  

Several factors go into determining an interest rate. When you go to a lender and ask for a loan, they normally calculate an interest rate for you based on…

 

• Your credit score
• Inflation and monetary policy
• The duration of your loan or loan term
• How much you want to borrow
• Whether you’re buying new or used

 

There’s nothing you can do about inflation or monetary policy because they’re dictated by the economy and the government. However, the other four factors are mostly up to you.

One thing to note is that the standards for a “good” interest rate are always changing. A good interest rate today could be questionable tomorrow, which is why it’s important to consider the factors that go into calculating your potential interest rate. Knowing this will help you determine whether you’re getting good interest in real-time.

 

Your Loan Term

The term of your loan, or how long you’re going to be paying it back, is one of the most influential factors on your interest rate. If you’re willing to pay back your loan in a shorter period of time, it’s likely that you’ll get a lower interest rate. Longer loan terms, on the other hand, usually come with higher interest rates.

 

How Much You Need to Borrow

If you want to borrow a large sum of money for a car loan, you’re probably going to be offered some fairly high interest rates. One of the easiest ways to combat this is by lowering the amount that you owe on the car. You can do this by supplementing your payment for your new car using what you make selling or trading in your old car. Then, you won’t have to ask for such a large loan from the lender.

The difference between the affects of buying new and buying used on your interest rate is surprising. Typically, new car loans come with lower interest rates, while used car shoppers will often get interest rates that are a bit higher. You can learn more about this by speaking with the helpful finance professionals at the dealership you’re buying your next car from.

 

Still Have Interest Rate Questions?

We at Andy Mohr Speedway Chevy hope this guide on car loan interest rates was helpful and gave you all the information you need to get started on finding your next car loan. Shoppers in Indianapolis, Fishers, and Speedway who still have questions should give us a call today!