What is an APR? APR is one of those abbreviations that consumers see everywhere, but many are unfamiliar with what APR is and how it is relevant to them. APR stands for "annual percentage rate." The annual percentage rate is the interest rate that a consumer is charged for an entire year on a loan whether it is a car loan, a home loan or another kind of loan. You might think that there isn't too much that you can do about the APR that you are charged, but that isn't necessarily a fact. As it turns out, there are ways that you may be able to lower your APR.
Why You Should Care About APR?
In short, the APR you receive for a car loan directly and substantially impacts your monthly payment. The reason is that the APR sets your interest rate. In this article, we will discuss a few pointers for how you work to get your APR lowered on your next new car or used car purchase.
Averages on Auto Loans for New Cars
36 months48 months60 months7.87%7.45%7.99%
Averages on Auto Loans for Used Cars
36 months48 months60 months8.50%8.50%9.49%
As you can see in the charts above, the APR for used cars tends to be higher than for new cars. Further, you will get a better rate if you pay the car loan off more quickly.
Tip One - The Importance of a Good Credit History and Credit Rating
If you don't have the best credit history, you shouldn't panic. There are still options out there for you so that you can get behind the wheel. With that stated, however, there is no denying the fact that a good credit history and a good credit rating invariably leads to a lower APR. Of course, that means that you will pay less on your car loan and other loans as well such as a mortgage loan.
Tip Two - Make Consistent and Reliable Payments on Your Car Loan
Credit companies love it when you show that you can pay your bills on time. When they see that you are paying your bills responsibly, they know that you are less of a credit risk. Once you have shown that you've been paying your car bill consistently for a considerable period of time, it may be possible to refinance your car loan.
Tip Three - Call Your Lender
If you call your lender to ask about your loan, you may very well be given valuable information regarding what you need to do in order to improve your APR. The trick is to call and ask questions. After all, if you don't ask questions, you can't get information.
Tip Four - Get in Touch with Your Car Dealership
Your car dealership has access to a tremendous amount of information about the entire car industry. In other words, they do far more than simply buy and sell cars. Contact them and see if they have any suggestions or tips about how you could get a lower APR and, in the process, save a bundle!
Four Tips for Lowering Your APR
- The Importance of a Good Credit History and Credit Rating
- Make Consistent and Reliable Payments on Your Car Loan
- Call Your Lender
- Get in Touch with Your Car Dealership