Buy Here Pay Here Kansas City, MO

Auto loan interest rates can be nearly as confusing as the number and types of new vehicles offered by the various car makers. In order to make it easier to understand, you first need to divide the car loan market into two distinct segments. In order to do that, we first need to look at credit scores (sometimes called a FICO score) and see how they affect interest rates. The Fair Isaac Company developed the FICO score as a way of predicting how a loan will perform with certain buyers. The score is a 3-digit number ranging from 300-850 and it measures the risk associated with lending money. The higher your personal credit score, the lower the risk of lending you money. The first score segment is the prime and near-prime sector. Generally speaking, a prime credit score is 720 and up, while the grey area between 640 and 720 is seen as the near-prime segment. These customers, especially those with a score above 720, will qualify for the best auto loan interest rates. In addition to qualifying for the best interest rates, these customers will also qualify for longer loan terms - anywhere from 72 months to 84 months, depending on the lender - as well as for lower or no down payments. The second score segment is the subprime sector. With a credit score of 640 or less, auto loan interest rates for these customers can be significantly higher, reflecting the increased risk associated with a lower credit score. Down payments for these types of loans can run anywhere from 10% to as high as 50%, depending on the customer's credit history. As might be expected, most subprime lenders will limit loan terms as well and, depending on the vehicle, 60 months is usually the maximum term. In addition to credit ratings, rates vary by the age of the vehicle, your likely to find a wide gap between new car loan vs. used car loan rates.