Many new car buyers start their shopping online by researching different banks. They all want to know what the average APR or interest rate will be on a car loan for your next new or used car. These figures often mean very little to buyers if they don’t understand how APR is determined and how it affects loan payments of Abilene area drives. Our finance team at Lawrence Hall Ford can provide you with all the information you need.
What is APR?
APR, which stands for annual percentage rate, is the amount you can expect to pay each year on your car loan. It’s important not to confuse interest rate with APR. Many borrowers see an advertised interest rate only to discover that the APR is slightly higher after they get the loan. The reason is that the interest rate is the amount of interest you’ll pay on the amount you borrow, while the APR is the interest rate you’ll pay on the amount you borrow PLUS and loan fees such as mortgage insurance, loan closing fees, or discount points.
What Affects APR?
There are a couple of things that might affect your APR. The shape the economy might play an important role in determining APR. However, the thing that affects APR the most is your credit scores. The higher your credit scores are, the lower the APR on your loan. If an individual with poor credit does manage to get a loan, the individual will have a fairly high APR, which will result in larger loan payments.
If you still have more questions on APR or want to know what type of APR you can expect on your loan, contact us, or pay us a visit in Anson. If you’re concerned about your credit, we can offer suggestions on what you can do to improve them and lower your APR.