Pat Goss' Tips & Expert Advice

Auto Interest Rates

Lenders do not arbitrarily pick interest rates for their applicants by throwing darts at a board decorated with various numbers. Most lenders use automated lending programs to not only approve or deny car loan applications, but also to determine car financing rates based on credit history and other information provided on the initial loan application. Oftentimes an auto loan application will not even come across the desk of an actual loan officer until after it has been run through a computer program and has received an initial decision. It is the loan officer's job to review the information with the applicant and to obtain further information needed to fully process the application. The lowest auto interest rates go to buyers who have high credit scores, a flawless credit history, an abundance of money in savings accounts, and a large downpayment. Applicants with less-than perfect credit may be able to obtain decent interest rates for a car loan if they are able to make a large down payment or are willing to amortize the loan over a short period of time; a 72-month auto loan usually has a higher interest rate than a 36-month loan does. Before applying for an auto loan, it's best to know what factors can bring your interest rates down so you can work toward them and get the lowest interest rate possible.