In general, Car loans interest rate begin at around 9% and can go up to 16% or more based on the customer’s credit profile and other factors.
The interest rates for a car loan are dependent on many factors, such as:
1 Loan amount – The higher the loan amount, the less the interest rate. So, if you are getting a high-end car, the interest rates will be less than when compared to buying a basic car.
2 Tenure – The longer the tenure, the more interest you will be paying on the loan. If you opt for a shorter tenure, then the outflow of money towards the interest will be comparatively lower.
3 Credit score – The higher your credit score, the lower the interest rates. A credit score shows the customer’s creditworthiness to the lender. So, if you have a high credit score, then the lender considers you has a low risk factor and thus reduces the interest rate. A good credit score also allows you to negotiate the terms of interest.
4 Credit history – The longer your credit history, the lower the interest rate. If you have a good and long credit history, the lender will have more reason to trust you and will lower the interest rates.
5 Relationship with the lender – Long standing relationships with the lender can give you the power to help lower the interest rates on the loan. If you have been a faithful customer, the lender will offer the best terms on a car loan.
6 Income – The higher your income, the lower the interest rate. This is because the lender considers you reliable and can judge that you can repay the loan without any monetary problems. Also, if you provide proof of regular income, then your interest rate will be lower.