If you’re in the market for your first car there may be a number of details you don’t know to look out for seeing as how you haven’t had the experience of shopping for a car yet. There are a bunch of factors that are going to affect what kind of car makes sense for you, but one factor to keep in mind when deciding what kind of car works best for your budget is auto loans.
Auto loans can help you purchase newer, more luxurious, and more dependable cars because they allow you to pay for a car over time instead of paying with only the cash you have on hand, but that flexibility comes with some drawbacks as well, primarily in the form of interest rates. These interest rates will affect how much extra you’ll be paying over time in interest to the financial institution in exchange for them loaning you their money.
That means that you have to look at what kind of interest rates you’ll be able to get on loans when trying to figure out your car budget. Even if you can get a loan, if the interest rate is too high it might not make sense to commit yourself to an auto loan until you can get better loan offers. But how do you know what a good loan rate looks like? And how do you improve your offers?
As car sales experts, you’ll give you a quick rundown of some typical interest rates for first time buyers.
Getting A Car Loans With No Credit History
The interest rates you have access to are primarily going to be based on your credit score. The problem is if you’re a first time car buyer, you probably have a shorter credit history. A short credit history hurts your credit score, whether you make any other kinds of payments on time or not, because length of time is one of the most important factors in credit scoring.
This means that you want to know you’re own credit rating before you start shopping for loans because the best places to look are going to depend on that score. If your credit rating isn’t in great shape (below 650) you may have to look at institutions that specialize in offering loans to people with lower credit ratings.
If you plan on car shopping in the future but are worried about your credit score, it may be a good idea to open a small line of credit now, to help build your credit history a little more, if not for this car purchase then for the next one. A trick you can use to keep your credit score in tip top shape is to make all of your car loan requests within a 14 day window, because when financial institutions look at your credit to see if they want to offer you a loan it actually hurts your credit. If it’s done all within the same 14 days it only counts as one inquiry no matter how many places have looked.
What Kind Of Car Loans Are Available Based On Your Credit Score?
Even if you’re a first time buyer, the car loan rates you can get are mostly going to be based on your credit rating. While the interest rates you can get are going to depend on your specific situation and the financial institutions you look at, the following ranges will give you an idea of what can of rates to expect.
-750: 4.25% for new car loans, 4.17% for used car loans
-700-749: 4.29% for new car loans, 4.19% for used car loans
-650-699: 7.92% for new car loans, 7.37% for used car loans
-450-649: 14.00% for new car loans, 12.76% for used car loans
-Below 449: 18.40% for new car loans, 15.00% for used car loans
These numbers won’t apply to everyone, but you can see how important your credit score is in figuring out what kind of loan rates you can get. Now that you know what to look out for you should be better able to shop for that first car.
If you’re still trying to find the right used Porche in New Jersey be sure to shop at Royal Motors Inc. for the best deals in NJ! We accept all trades regardless of condition and with bank financing starting at 2.89% we’re able to accommodate most credit needs. Speak to our friendly team of experts at (856) 346-2121 or visit our location in Voorhees, NJ today!
