Hey im a first time car buyer. My credit score is okay around 700 but my income is low bc im a student and i work part time. The car dealer says i got approved for a loan at 7% interest rate. Is that a high rate?? he says its great but im unsure?
by 
Anonymous
ANSWERS: 5
-
If I were you I would save up a couple thousand and buy a used car. Too many people get caught up in the car payment trap. If you can avoid this, you will be way better off. Instead of a 4 or 5 hundred dollar a month car payment, spend a couple hundred a month on maintainance if necessary and you will be money ahead.
-
7% is pretty high especially for a new car - Used cars usually have a higher interest rate and if the care if over 5 years old - 7% is not bad.
-
Well, you have good credit. I was twice offered 12-15% for a car purchase and there's some who are paying 20% or more.. Their reasons (Dealers/credit lender) is "You're a "High Risk" So they can basically rip you off.. Try a local CU or see what a bank would offer, you might be surprised..
-
Your credit score is an important factor in getting a low interest rate on an auto loan, although it isn’t the only factor a lender evaluates when approving a loan. The car (new or used), loan term length (longer terms typically have higher rates) and the lender itself all have a play in the loan’s interest rate. Although I believe that an interest rate of 7% is probably good for you.
-
If your buying used and the dealer doesn't offer any kind of warranty, then don't buy from a dealer. You'll always get a better price buying private party through something like craigs list or autotrader. Just have a mechanic check it out and get a carfax on it. Unless I buy new I'll never buy from a dealer again. Dealers are trying to make money, people selling their cars privately aren't.
RELATED QUESTIONS
Copyright 2023, Wired Ivy, LLC