How to Get a Low APR Auto Loan in Phoenix

Buying a car in Phoenix is a signature event in our lives. It’s one of the most exciting purchases we make. A car is something that will be used daily and will get us from A to B. We love our cars so much that we often name them. They become part of the family. For a lot of us, we like to think that our car reflects something about ourselves. Most of all, though, we rely on them.

For all the reasons that we get excited about getting a car though, there is always the less fun part – how to pay for it.

Cars are not cheap. For most people, paying the full price of a car upfront is simply not an option. Consequently, people have to take out loans to finance their purchase. They borrow the amount of the price of the car and then make monthly payments that include an interest portion and a portion that reduces the size of the loan.

There are a couple of choices you can make when deciding who to borrow from. You can take out a traditional loan from a bank or other lending institution. Or alternatively, you can use the financing options that are offered by the automaker or car dealer.

Automakers Offer Low Apr Auto Loans in Arizona

Automakers will heavily advertise their loan options and will encourage you to finance your car purchase by borrowing the money from them. It’s not a bad thing to do. In many circumstances, you will actually get a lower interest rate from the car dealer than you would borrow the same amount from a bank.

You may ask yourself at this point, why would an automaker offer lower rates than a bank? Surely, they could charge more for the convenience of dealing with the same agent in both the purchase and financing of the vehicle?

There are a few reasons for this.

The first is that they hope that the low APR car loan they are offering will entice more customers to come into the store and to drive increased revenue from car sales ultimately. People are drawn to signs that quote statements such as “zero % auto loans” and may enter the dealership just to check it out.

The second is that, unlike banks, they don’t have to make money from the issuance of the loan for their business as a whole to be profitable. If they are making a profit from the actual sale of the car, then breaking even on the loan is not too much of an issue for them.

Of course, not all automakers offer zero percent financing on all of their vehicles. The chances are, the car that you have your heart on will not be available to you at such a great interest rate. There are many qualifiers in the company’s advertising, and it’s not the same as what you need to get a title loan in Arizona. Basically, not everyone can get these low APR auto loans. It will usually be dependent on you having an excellent credit score and a long credit history.

Average APR for Car Loans with Bad Credit

What do you do if you have bad credit but need to take out a car loan? How much APR is too much for purchasing a car? These are questions we will look into now.

The average APR for a car loan for someone with good credit is around 3% at the moment. For someone with fair credit (a credit score between 620 and 659) the average APR is closer to 13%. These are pretty stark differences. Our recommendation if you are at the lower end of the spectrum with regards to your credit score would be to probably hold off on that car purchase for a little while. In the meantime, try to boost your credit score and then when it comes to getting an auto loan you will get a much better APR.

There is no such thing as a definitive APR level which we would class as “too high”. It’s important to remember that a high interest rate on the debt will really impact your personal finances. Ideally, you want a short term on your auto loan so that you are not paying off the loan for years into the future and have your payments just covering the interest that is accruing instead of reducing the loan amount.

Your best bet for trying to get a low APR auto loan is to choose a vehicle that’s priced within your budget. This sounds like boring advice that will not get you the car of your dreams, but it will ensure that you don’t pay massive amounts of interest on your auto loan for the next 10 years. Once you’ve chosen your make and model, make sure to shop around. There are plenty of automakers and car dealers out there who are willing to take a loss on the auto loan portion of their business to make a sale.

Buying a car is an exciting event. Hopefully, you manage to find a low APR car loan in Phoenix that will make you even more excited as you drive out of the lot.

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