What Is Considered A Low Interest Rate For A Car Loan? (FICO 500-600)

A client is planning on purchasing a new car, lives in Indio California and is a store manager at an upscale store in the city. His credit rating is in good shape, he rents an apartment and owns his current vehicle which he plans to trade in. He has two questions. First, what is considered a low interest rate for a car loan and secondly should he provide a down payment on the car he purchases if the interest rate is zero interest?

The car business is very competitive with dealers and manufacturers getting together to provide incentives to buyers at various times of the year and on specific models to provide competitive financing. When you purchase a car you are actually negotiating two different deals. First and foremost is the car you want to buy along with the price that you are willing to pay for the car. The second deal is the loan you may or may not take on the car. Some people will pay cash in order to avoid a monthly payment, while others have no choice. They need a car loan to purchase the car.

With the car business being so competitive, a good negotiator can arrange for a low interest loan or in fact a zero interest loan provided that they have the car that you actually want. If you have the cash why would you pay anything down. Why wouldn’t you leave the money invested and earn some income from that same money? Not only is the type of car important, the time of year that you purchase the car is also important. The end of the month, the end of the year, the last group of new cars that are still available from the previous model year are all good opportunities to negotiate a better deal for your car including finding the best rates for a car loan.

Loan rates for cars vary from zero interest loans to as much as 10% or higher depending on your credit rating and which lender you are dealing with. Typically dealers may have access to some of the most competitive rates for car loans. We have shown several calculations at the bottom of this post to illustrate the difference in cost for various interest rates.

DEFAULT LOAN APPLICATION FOR BORROWER’S INFORMATION

Car Loan Amount :: $41000

Car Loan Application and Processing Speed (when do you need the funds):: one week

Do you currently have a mortgage? :: no, I rent an apartment

Bank Name and Branch :: Chase Bank, Highway 111

What City/Town, State and County do you live in? :: Indio California

Zip :: 92201

What is your employment field? :: Retail Sales

Employment Position :: Store Manager

When are you paid? (monthly/weekly/biweekly):: biweekly

Your credit rating to be – excellent, fair, or bad? :: Fair to excellent as far as I know

How did you find us? :: looking for online car loans with low interest rates

How are you paid? (direct deposit/paper check):: Direct deposit

Gross Amount Per Paycheck :: $2000

Do you agree to have this information published online, without your PRIVATE information of course? :: Sure, just do not mention the store where I work. Not sure if they would like to be associated with an online lender.

Extra information here please (some detail):: I am planning to purchase a car and will need a loan to allow the purchase of the car. What I really want to know is how much interest I should pay on this loan. I have heard of ridiculous rates as high as 10% and other rates around 1.9%. A few months ago when I was not looking for a car, I even saw one dealer that was offering new cars with a 0% interest loan. With some dealers offering these rates and others not offering these kinds of deals, I have found my options limited in terms of the kind of car I actually purchase.

For example, I would really like to purchase one type of car that appears to fit my needs. the problem is that I cannot find a dealer offering this particular car with attractive interest rates. I can purchase other cars, which I really do not want at better rates, but then I would have a car that I really do not want. I also have looked online for car loans and have found a variety of interest rates for car loans with some as high as 10%. There are no zero interest loans available from lenders online, which is really no surprise. Can you tell me what is considered a low interest rate for a car loan?

Note to Lender :: In terms of my credit score etc, I have a decent fico score and I have a full time job as a store manager in the city of where I live. We run a good store with a full year round business. It is a high end store and I make excellent commissions on sales that I and my store clerks make. I rent an apartment, currently own my own car which I want to replace. It will be traded in on whatever car that I eventually purchase.

Another question that I have about car loans, is whether I should provide a down payment or not? Most dealers will push for a down payment and I am wondering if I qualify for a 0% loan, why would I provide a down payment? Please advise since I would like to purchase a new car in the next few weeks.