Our article about auto loans is likely to be written for people who have an interest in cars or are planning on acquiring one, which means that their article is a little more complicated than just deciding what the topic will be!
What is the average auto loan interest rate?
A 2017 Credit Union National Association study found that the auto loan interest rate is usually between 7 percent and 14 percent of an annualized personal income. The exact interest rate depends on factors such as credit institution, loan term, market rates at the time, and numbers of your trade-in.
The average auto loan underwriting program takes into account several metrics when a customer applies for their car loan. These include their credit worthiness, his or her monthly gross income, the length of time they’ve been employed, and their debt-to-income ratio.
What is the difference between a car loan and an auto loan?
A car loan is a loan given to pay for one or more cars. A typical interest rate would be 10-15% with payments that mature within 12-36 months. An auto loan takes the same payment schedule and inserts an auto as an asset typically secured by a motor vehicle and bearing the customary degree of risk associated with such assets, the auto lifeline being collateralized therewith.
The pros and cons of taking out an auto loan
There are plenty of good reasons to consider taking out an auto loan. The average interest rate is around six percent. In order to purchase a new or used car, potential buyers need to take out a loan with these high interest levels. There are some downsides to vehicle loans, though. Auto loans usually carry higher rates of interest and require the buyer to save up a certain amount of money before they continue their auto shopping journey.
Advice for how to get a low interest rate on your car loan
Many people are looking for alternative methods of buying a car. Getting an auto loan can seem easy, but the interest rate can be substantial depending on what the lender offers. However, there are ways to get a low interest rate when using a down-payment and securing various other financing options like credit card debt or personal loans.
There is a wide range of loan interest rates that are offered by different lenders. The price differs from provider to provider so it is highly recommended that consumers shop around for an affordable option. Average car loans can often come with high interest rates despite the alarming increases described in the blog, however interest rates and quotes vary depending on many factors. Given these high rates, the consumer should be wary if they are considering buying a new car.