What is the Average Interest Rate for Car Loans?

What is the Average Interest Rate for Car Loans?

Car loans come at incredibly high rates because the lenders rather than reject loan applicants with bad credit, they give them loans at high interest as a way of managing the risk involved as most of these lenders are high-risk lenders. Majority of them will not qualify to obtain a loan from banks because of their bad credit.

Loans are also banned in 25 states, because of loan lenders who are exploiting borrowers by giving them offers that are too juicy to reject, when they know they still might not fulfill the terms of the loan and at the end of the day. 20% of borrowers who get loans end up losing their car due to their inability to pay the loan. Loans are categorized as predatory lending, and therefore they are banned in some states.

Average Interest Rate of a Car Loan

The interest rates for a car loan is higher than what you get with credit card companies who are out to take advantage of consumers with bad credit. Car loans have a monthly interest rate of 25% which amounts to 300% APR. For example, if you are paying $400 a month interest on a $3,000 loan, after 7 months you will have paid $2,800, which is almost equal to the principal amount, and you still have an outstanding $3,000 from the original balance.

If you look at it critically, the high-interest rates might not be worth it if you can get emergency loans from other means like friends and families. It is cheaper, going for a car loan should be a last resolved when you have tried all available means but to no avail. Learn more at https://www.consumerreports.org/car-financing/costly-misconceptions-about-car-loans/

How Do Car Loans Work?

You need to take your time to understand how car loans work. The way it works is that the borrowers get a loan for a car, sports utility vehicle, pickup truck, or other types of vehicles. You will get a certain percentage of the value of your car as the loan amount. Car loans are very easy and fast to secure because it does not require many documents and there are no credit checks. All credit types can qualify to get a car loan! You can get approved for a car loan in less than an hour and get your cash credited in a few hours from the time your loan is approved. It is a good way to secure emergency loans. The shorter the loan period, the less you will pay for interest.

Now that you know all there is to know about car loans, you can be sure to get the best deal when you apply! So, what are you waiting for? Go to your nearest dealer and ask them how they can supply you with a loan to put towards the purchase of a new vehicle! Car loans are the quickest and easiest way to finance the purchase of a new or used vehicle!

Content Writer for TFC Title Loans. In business since 1994