Jul 29, 2022
How your interest rate affects your car payment
When considering a car loan, interest is the price you pay to borrow money from the lender. You, as a borrower, are expected to repay the amount you borrow plus interest in monthly payments over the life of the loan. Your interest rate is influenced by a number of factors, your credit scores, the loan term and the size of your down payment.
In the past six-months, the average new vehicle price has been around $47,000. At that price point you could buy a 2022 Jeep Gladiator that starts at $45,000.
Let’s break the process down
Let’s say you have $2,000 for a down-payment on a vehicle that costs $47,000. At a 5% interest rate for a 72-month loan, your monthly payment would be around $725. If your interest rate jumps to 6%, that would increase your payment by $22 per month. An extra $22 per month may not seem like a lot, but over the course of your loan it adds up to $1,500.
We have a few tips to help you lower your monthly car payment in addition to shopping for the lowest interest rate.
Excellent credit vs. rebuilding credit
If you have excellent credit, you may qualify for a lower interest rate. However, some car shoppers may be working on rebuilding their credit which can lead to a higher interest rate. Shoppers with less than ideal credit can qualify for the Kunes Fresh Start Financing Program.
We pride ourselves on offering financing for everyone regardless of their credit situation. Our specialists will work with you to determine the best vehicle for your needs within a budget you can afford. To help keep our customers in their comfort zone with their budgets we offer weekly, bi-weekly, and monthly car payment options.
Find the best New Car Warranty
Many new cars come with a standard 36,000 mile or three-year (whichever comes first) warranty. This is intended to cover off on repairs that may be needed during this timeframe. Kunes offers a No Fear Lifetime Certified warranty that gives our customers peace of mind the second they drive off the lot with full coverage mile-one, day-one.
When it comes to interest rates, whether they are rising or falling, doing your best to find the most advantageous rate, protecting your credit score, saving your money, and investing well in your future can have a significant effect on your buying power.