What You Should Know About Auto Loan Rates

by Kyla Camille Nievera, Negosentro.com |

If you’re in the market for a new car, even though you’ll certainly be going to the websites of the individual lenders and checking out their interest loan rates, it’s still helpful to obtain some general info on what you can expect these to be for new and used cars.

Different lenders have different car loan rates; however, they’ll be somewhat similar and they will all be directly tied to your credit score. More specifically, the score the banks use is from a different source than the one you’ll see on your credit file, but the numbers are similar nonetheless.

How Do Car Loan Rates Vary?

As mentioned, they are always primarily tied to a collective assessment of your creditworthiness; which is in turn reflected by your FICO score and other details of the credit history on file with the major reporting bureaus.

If you have poor credit, then you can expect a higher rate than someone with better credit. Why is this? Because in addition to being compensation for the lender allowing you to borrow his money, a portion of the loan also includes the risk he is assuming in letting you do this – he is receiving money for the prospect of you defaulting.

People with prime credit ratings do not pose much of a risk, as evidenced by their stellar credit history, and so the amount the lender receives is very small – sometimes none at all for no-interest offers.

Another way that car loans vary is with respect to the used and new car slots. Used cars almost always have higher interest rates than new cars, because people with great credit usually buy new cars and so the risks associated with them are lower. The reason is also tied into how many of the larger banks have deals with auto dealerships that make it beneficial to hit quotas on new car sales.

Capital One Bank Auto Loan Rate Examples

As one of the biggest banks and lenders, Capital One’s auto rates are useful as benchmark for what you can expect from others:

  • If you’re financing a brand new vehicle for a loan term of 36, 48, 60, 66 or 72 months, then the interest rate is 2.49%.
  • If you’re financing the purchase of a used car for 36, 48 or 60 months, the interest rate is 2.89%. If for 72 months, the rate is 3.39%.

Most of the variation to these will come as a result of your credit score.

LightStream (SunTrust Bank) Car Loan Rates

Lightstream is an extension of SunTrust Bank, and they have a couple of auto loan solutions. The better your credit, the better the loan terms. With excellent credit, in fact, you are all but free from the possibility of vehicle liens with Lightstream’s secured auto loan option.

The actual interest rate fee schedule is on the Lightstream website, as it is multi-tiered and arranged into four separate loan amounts divided between $5,000 and the maximum amount of $100,000.