The used car loan rates you see from various lenders vary from day to day, so it’s a great idea to keep an eye on them as you get closer to making a decision about your next vehicle purchase. Why do the rates vary so much?
One reason the used car loan rates at one lender will be higher or lower than the next finance company is that many companies actually borrow the money they loan. This sounds bizarre, but it’s true. When a lender makes a loan, the capital they use to lend the money is then tied up in the loan itself. That money has been spent, at least until it comes back in the form of payments, and so it’s no longer available to be used. The company considers the active loans that are “on the books” as part of their investment portfolio, but in order to continue to make money, lenders have to get more money from somewhere. So many of them borrow it.
The trick is that giant finance companies have more “borrowing power” than your average consumer. If you’re borrowing money at standard used car loan rates, the lender is probably borrowing that money but at a much lower rate. (Part of the reason for the disparity between the rates is the strength of the company’s sheer size. Lender lenders know these companies are “good for it.”) The difference between the rate at which the lender borrows the money and the rate at which they lend the money is the lender’s profit. That’s just how it works, and this keeps the money flowing around in the credit industry. RoadLoans is known for providing auto solutions. Check out how the current car loan rates matter.
So how do you find out what the current used car loan rates are at a particular finance company? Sometimes you can just ask, but usually it’s more complicated than that. This is because most lenders have to know a lot more about a potential customer before they’ll quote a rate. They have to know whether the person has near-perfect credit, completely terrible credit, or something in between. If someone is at the top of the credit spectrum, he or she will mostly likely get the best rate possible. Conversely, someone near the bottom of the continuum will have to pay a much higher rate for his or her auto loan — if they get financed at all. It’s all up to the lender. It’s their money — or money they’ve borrowed — so they can make their own rules.
So you’ll probably have to do a credit application to find out the rates you’ll get from one lender or another. It may seem a steep price to pay just to find out used car loan rates, but that’s how it is with auto lending companies.Written by: