Car buyers in today’s recovering economy are often looking for the best tips for financing part or all of a new or used car purchase. One of the top car firms online, Edmunds, is offering a recently updated guide to car buying that reveals more about how buyers can access the best interest rates and get the best deals on a new set of wheels.
The Edmunds guide starts out by quoting a staffer from Experian, one of three national credit agencies and a major player in evaluating lending, as saying today’s car buying landscape is a “changed marketplace.” As recently reported, lenders are reaching out to subprime borrowers, setting up different interest rate qualifications for various auto loan applicants.
Edmunds also includes some hard numbers for estimated interest rates on various auto loans. This starts with “tier 1” or “prime” borrowers, those with credit scores above 720. These elite borrowers can often get interest rates in the range of 3 to 4%. Tier 2 borrowers have credit scores going from 700 to 720, and can often access interest rates in the 4 to 5% range. The next level of borrowers have credit scores hovering in the high 600s, and their qualifying interest rates can range from roughly 5 to 6%. The next group of borrowers goes into subprime territory, with credit scores from around 630 to 670 and interest rates range higher for these borrowers, up to 8%.
Edmunds also points out that while top-tier borrowers can usually make an auto loan as easy as the flourish of a pen, those with lower credit may be required to make a down payment of several thousand dollars to get access to the car financing plan that they want. For these borrowers, Edmunds offers several critical tips. The first is to set a budget and understand what kind of financing is affordable. Borrowers should also do a credit check to know where they stand in terms of a credit score. These interested car customers can also use a pre-approval process to figure out what they qualify for before shopping for the actual car.
If you’re headed to the dealer’s lot anytime soon, take advantage of these words of wisdom from expert auto industry analysts to get more information and be better prepared to make a solid deal.