The annual percentage rate (APR) you get when financing a new car is important and not something you want to overlook. First let me explain what APR is, and then I’ll fill you in on how it’s affected. APR is the amount of interest that will be added to your financing bill, and it’s important in making sure that you get an auto loan that you’ll be able to afford and pay off by the end of the agreed to loan term. If you go with a shorter loan term, you can usually get a lower interest rate, but your monthly payments will be higher.
OK, so now that you have an understanding on what APR is, let me explain how your APR is determined. Your credit history plays a big role here, but there are some other factors that affect APR, too:
- Credit rating and history
- Current finance rates
- Competition and market conditions
- Manufacturer incentives
With those other items in your favor, in addition to a high credit rating, you should have no trouble getting the best APR available. Never underestimate the importance of your credit rating when it comes to a major purchase like a new car. Routinely checking your credit score with the major credit bureaus is a good way to stay on top of your rating and make sure that all of the information is correct and up-to-date. A lot of credit reports contain serious errors or mistakes, and the last place you want to learn that is when you’re sitting down to finance!
Take a little time and watch the video below to get a better understanding on the importance of your credit score in today’s market:
httpv://www.youtube.com/watch?v=ud7DchMDvv0
