How Is a Car Loan APR Calculated?
Factors That Influence APRs Car loan interest, also know as the annual percentage rate (APR), is influenced by a number of variables, including the lender, state in which the loan is taken, term of the loan and the principal of the loan. APR Eligibility Auto lenders and car companies often use terminology like “for well-qualified buyers” when referring to interest rates in advertising. Qualifying for auto financing is directly tied to the creditworthiness of a buyer. Auto lenders use credit reports and credit scores to determine both creditworthiness and the level of qualification for an interest rate. Credit scores are determined by a person’s history of borrowing, repayment and how much debt they hold. Credit scores range from 300-850, with the higher number being the best possible score. The higher the credit score, the lower the interest rate. Well-qualified buyers are often classified as individuals with a credit score between 720-850. How the Rate Is Calculated The rate assigned
