Regardless of whether you’re interested in financing your first vehicle purchase or you’re a seasoned pro, it’s never a bad idea to brush up on your auto financing know-how. Aside from a home, vehicles are one of the biggest purchases most people will make it their lifetime, and the most common path to taking the wheel of a new Cadillac ATS Coupe, CT6 Sedan, or Escalade ESV is by utilizing an auto loan.
What is Auto Financing?
Auto financing and auto credit really just refer to loans from a bank or lending institution that folks access in order to pay for a vehicle. This is what you pay back monthly and over a set amount of time, and your payments reflect the principal loan plus a pre-determined percent of interest.
What is a car loan interest rate?
A car loan interest rate simply refers to the interest you’ll pay on your vehicle loan. Like we mentioned above, your monthly car payments goes to pay both the principal loan and the amount of interest. The bank or lender sets the interest rate, and it’s displayed as a percentage of the original principal, to be paid back over an agreed-upon amount of time, called the term. For example, a $25,000 60-month loan with a 4.28% interest rate will ask you to pay back the initial $25,000 plus 4.28 percent of $25,000 in even installments over the course of 60 months.
How are auto loan interest rates calculated?
Interest rates are based on a plethora of factors, some of which are transparent (like your credit score) and others are more difficult to parse (like market conditions). In general, the higher your credit score, the better you can expect your interest rate to be, since a high credit score represents a low risk to the lender. Other aspects that go into calculating a car loan interest rate might include size of down payment, whether you’re buying new or used, what your loan-to-income ratio is, or what your profession is/how long you’ve been employed at it. These go toward determining whether you pose a low- or high-risk candidate for the loan, and from there, the lender calculates the final, personalized interest rate.
What kind of financing will I be approved for?
Unfortunately, we can’t answer that for you just now, because it’s based on a lot of variable and highly individual factors, but it is something we’re more than happy to discuss with you one-on-one. One way to be certain about what you’ll be approved for is by applying for credit with the convenient application found above. Once you submit your information securely and confidentially, we’ll get a decision to you ASAP, and you can wonder no more.