How Are Interest Rates for Auto Loans Established?
Your credit status is the main factor considered in determining the interest rate or the so called percentage rate of the Auto Loan. If you have sullied credit score then you are more likely to get higher rates as you are posing a greater risk to the lender and vice versa. There are two types of interest rates, the fixed and the variable. The fixed rate is permanent, meaning: throughout the whole duration of the loan it will never change. If you get a rate of 6% at the onset of the loan, you will pay the same monthly rate until you have completed the payment. The variable rate, on the other hand, may offer as low as just above zero percentage but may fluctuate throughout the duration of the loan and may even reach the ceiling as specified in the contract.
