 TITLE: What Auto Loan Rate Can You Get With Your Credit Score? CONTENT: How Do Auto Loan Rates Work?\n----------------------------\nAuto loan interest rates are determined through risk-based pricing. If a lender determines you're more at risk of defaulting on your loan because of your credit score and other factors, it will typically charge a higher interest rate to compensate for that risk.\nFactors that can impact your auto loan interest rate include:\n*   **Credit score and history**: Even if your credit score is relatively high, you may still end up with a higher interest rate if there are negative items on your credit report. Examples can include missed payments, collection accounts, repossessions and bankruptcy.\n*   **Loan term**: The longer your repayment term, the more risk it carries for the lender—both that you might default on your payments and that market interest rates may increase, making your loan less profitable than new loans. You may be able to score a lower interest rate by going with a shorter repayment term.\n*   **Down payment**: Putting more money down on your vehicle purchase not only reduces how much you owe, but also decreases the risk associated with your loan. As a result, a high down payment may result in a lower interest rate.\n*   **New vs. used vehicle**: Auto manufacturers provide many incentives for car buyers to purchase new vehicles, including lower interest rates through their financing companies. Other lenders, including banks and credit unions, may also lower their rates to compete. In contrast, if you're buying a used car, there's no incentive for lenders to offer lower rates, which results in higher rates on average.\n*   **Income and debt**: Lenders will also consider your debt-to-income ratio (DTI), or how much of your gross monthly income goes toward debt payments. A high DTI may be a sign that you can't take on any more debt without putting stress on your budget, and may result in a higher interest rate.\n*   **The lender**: Each lender has its own criteria for determining auto loan interest rates, and may have differing starting and maximum rates.\nWhatever auto loan interest rate you qualify for, it'll be represented in the form of an annual percentage rate (APR), which may include the cost of both interest and fees. The lender uses your interest rate to amortize the cost of the loan. This means that you'll pay more interest at the beginning of the loan's term than at the end. END