If you’re shopping for a car with less-than-perfect credit, you’ve heard again and again about the importance of your credit score for:
- Getting Approved
- Determining Your Auto Loan Interest Rate
At Buy Here ‘N Pay Here, we pride ourselves on helping consumers accomplish #1: getting approved for Buy Here Pay Here financing. We have only indirect control, however, when it comes to determining what interest rates. After all, it largely comes down to credit score. What we can do is provide you the information you need to:
- Get the Best Rates with the Score You Have
- Increase Your Credit Score for Improved Rates
So that the subject won’t seem purely academic, let’s look at a sample case that showcases the power of credit score in the auto financing process.
Currently, the average interest rate for a buyer with a credit score ranging from 660-690 (the upper end of Nonprime auto loans) is around 9%, while the average interest rate for scores below 660 (Nonprime to Deep Subprime auto loans) is around 13%. That’s a difference of 4 percentage points. Let’s look at how this plays out over the course of a 60-month $15,000 auto financing loan.
Interest Paid over Life of Loan
- 660-690 Credit Score, 9% Interest Rate: $3683
- Sub-660 Credit Score, 13% Interest Rate: $5478
That means dropping a single credit tier could cost you $1795 on this vehicle; conversely, improving your credit a single tier could save you that much. To put this in even greater perspective, that’s a 12% savings or cost on the original price of the vehicle.
