What is an APR?
If you own a credit card, it is extremely vital that you keep a tab on your credit score. This would especially be the case if you intend on applying for an auto loan anytime soon. You may want to understand that a great credit score will help you with a decent APR rate. For example, when you apply for an auto loan, you will be paying the loan for a fixed period of months. Throughout these months, you need to pay back the amount taken through the loan along with the interest.
APR or Annual Percentage Rate is the amount of interest you end up paying through the year. This is, however, based on a number of factors, including your credit card score. To help get a good APR, make sure to negotiate with your dealer.
How Your Credit Scores are Usually Calculated
Your credit score is based on five different elements or measures. Let’s understand how each measure affects your score:
While factors such as your income, employment or even assets would not affect your credit score, lenders will take these factors into consideration under a review.
How to Know your Credit Score
There are a few credit report agencies that will be able to help you with your credit score. While the scores may differ slightly from one agency to another, keeping a record of your scores may be a good idea. This way, before you go ahead and apply for a car loan, you will be able to print out the scores received from the agency and use them to receive the best loan rate.
Invest in a New Vehicle to Lower the Rate
New vehicles come with lower interest rates when compared to an old or used car. While a used vehicle or old car would mean a riskier loan for the lender, the company would compensate the risk by asking you to pay a higher rate of interest. Manufacturers want you to invest in new and high-end models and will sometimes reward the buyer with a lower interest rate.
However, before you get into anything, make sure to read the contract carefully. It is also important that you educate yourself on the APR and how it works. The last thing you want is to be paying for something you don’t know about. Take the time to talk to a professional if you don’t understand the process. You can also seek help from a reputed dealership in your area.