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How do I determine the interest rate on a car loan?
I’m a thrifty person, so I always want to know where my money is going. I want to get a car loan, but I first want to determine the interest rate. How can I figure the interest rate on a car loan?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Being thrifty is a virtue! So if you want to save tens of thousands of dollars over your lifetime, it’s a savvy move. If you want to determine the interest rate for your loan, you need to apply for the loan or loan preapproval. After you apply for either of these, the lender will provide an interest rate.
- Your credit
- Your income
- Debt-to-income ratio
- Loan amount
- Loan-to-value ratio
- Length of the loan
Your credit and debt-to-income are the two biggest factors when determining your interest rate. However, a high principal, loan-to-value ratio, or long term can cause your interest rate to increase.
To get the best interest rate possible, follow a few of these tips:
- Check your credit report before you apply for a loan and pay off any delinquencies or derogatory marks.
- Shop around for loans.
- Pay off any high-interest debt to lower your debt-to-income ratio.
- Buy a car that’s within your financial means.
- Choose a shorter term, for example, 48 months vs. 84 months.
Don’t stretch yourself too thin on a car payment. You’ll also need to budget for maintenance, gas, and car insurance. Make sure to shop around for car insurance with the Jerry app to help you get the best rates. As a licensed broker,
Jerry
helps you find and compare quotes from over 50 top providers in minutes. When you find a better rate, Jerry can help you buy your new coverage and even cancel your old policy!View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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