Why is there such a range of interest rates for car loans on Mini Coopers?
"I was shopping around for a Mini Cooper. When I looked at lenders, the advertised interest rates seem low, but, when I get pre approval, my rate is astronomical.
Why is there such a range of interest rates for car loans?"
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Answered on Jun 18, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
“Many factors determine your interest rate that could explain this range in rates you’re seeing. In most cases, the advertised rates are for people with great income, little debt, and a top-notch credit score. Their interest rates are low because they’re perceived as low risk by the lender.
If you have a low credit score, limited credit history, or a high debt-to-income ratio, the lender considers you higher risk to pay back what you owe them. To counteract this risk, they increase your interest rate.
In addition, the length of your loan also dictates what your interest rate will be. It’s essentially a trade-off. The longer the loan, the higher the interest rate although your monthly payments will be lower. Conversely, a shorter loan will have a lower interest rate, but your monthly payments will be higher.”
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