Need Help Navigating High Interest Rates? We Have Some Advice!

A stock photo of people looking at a car.

How Do You Get the Best Interest Rate on a Car Loan?

If there is a single concern at the top of mind for most Davis Chevrolet customers, it’s the interest rate they’re going to pay to buy a vehicle. There are several factors that determine how much interest a customer will pay on a car loan. Some of these factors are out of their control, but there are also several that can be affected by a customer. So, how do you get the best interest rate on a car loan? Let’s take a closer look at some information that could be helpful during your next visit to the Davis Chevrolet showroom.

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Things That Affect Your Loan’s Interest Rate

The base interest rate in the country is set by the Bank of Canada. As we have seen over the last several months, when the national bank raises interest rates, obtaining credit gets more expensive. Additionally, there are several factors, such as the Bank of Canada, that can affect the interest rate you pay on any kind of automotive financing. These factors include:

  • Credit Score — A higher credit score often means getting a lower interest rate.
  • Length of Loan (Loan Term) — The less time a loan lasts, will cut down on the amount of interest paid. 
  • New Vs. Used — Choosing a new vehicle to buy versus a used model will affect how much you pay in interest.
  • Income-to-Debt Ratio — Having a high income-to-debt ratio can force lenders to charge more interest.
  • Down Payment — Putting down a larger down payment will reduce the amount of money that needs to be financed, thus reducing overall interest payments made.
  • Type of Loan — Fixed-rate loans can carry higher interest payments.

Get Ready to Buy a Car

Buying a car, truck, or SUV shouldn’t be an impulse purchase. Beyond researching vehicle options, there are some things you need to do to make sure you’re financially ready to make a major purchase. Arguably, the most important thing a person should do before buying an automobile is to take a close look at their credit report. Errors happen and can make finding affordable more difficult.

The Davis Chevrolet financial team has extensive experience helping people with a wide range of credit situations. If you’d like to see how we can help, make an appointment with one of our product experts today.