A score of 670 or higher, from good to excellent, is required to buy a car. Interest rates will normally be below 6% if you fall into this group. Lending institutions can still consider whether you have a credit score lower than 670, but they can issue higher interest rates. But before you sign anything, it's important to know how the interest rates on these loans work.
Getting a longer-term auto loan with lower interest rates can keep your monthly bill below a budget-breaking level, but is it a good deal for you? To answer that question, you need to understand how interest rates on car loans work. RideTime can provide you with a quality used car even if you have the minimum credit score for a car loan. According to Experian data, a person with a score lower than 700 points could get rates on used cars of around 5.47%, compared to 15.86% or more for a buyer who obtained a score in the mid-500. Letting financial institutions, credit unions or credit bureaus know that you can pay your credit card bills on time and that you're short of money increases the likelihood that they'll grant you another credit card or loan.
Your FICO score for cars is a special rating ranging from 250 to 900 and that takes into account previous car loan payments more than the traditional FICO score. Interest rates vary depending on your credit score, so knowing what to expect on average can help you budget for your car. Research loan interest rates if you are going to apply for an auto loan (others include personal loan rates, new and used car loan rates, etc.) But let's face it, most of us don't have the money to directly pay for a car or truck, so we rely on funding to buy them. If you want to pay the best price for the car and get out of debt faster, you'll have to manage a substantial monthly payment.
The combination of credits refers to whether you have installment loans (with equal payments over a given period) and revolving credit (variable payments with no established end date, as is the case with credit cards). Along with a house, your car is likely to be one of the most expensive purchases you'll ever make. RideTime can provide you with a used car even with a bad credit history, when other dealers can't. For borrowers with credit scores of 700 or higher, the average interest rate on a new car loan has been 3.65%.
A target credit score of 661 or higher will allow you to get a loan for a new car with an annual percentage rate of around 4.90% or more, or a used car loan of around 5.47% or less. Be a more informed car buyer if you know the factors that can affect the interest rate on your car loan.