Auto loans are an important part of the automotive industry. The vast majority of the population finances their cars regardless if they are old or new. As car loans are a financial product in high demand, it is also subject to a lot of factors that can affect the offer you may be getting in your next car.

Amongst the most important factors that affect auto loans is the credit score. Your history and ability to pay off past loans takes a heavy toll. If you have a score of around 600, you can expect offers with an interest rate of up to 21% per year. This can quickly double the money you pay on a car and by the time you are done with the payments, the car can lose even 50% of its value, deepening your losses.

Another important factor that can influence your financing options is the down payment. Certainly, you can get a car without any down payment but the interest rate will be high. The more you pay upfront, the lower the interest. This effect is compounded by the fact that you will pay a lower interest for a smaller amount of money. What most would recommend is to have a down payment that is at least 15% to get a better deal.

Lastly, how you finance a car can also affect your loan conditions. The car dealer can also be the middle man between you and the lender. They get a commission on each car loan they bring in. That commission is paid by you, the customer. You can get a better interest rate and lower fees if you look at independent financing solutions that do not have a business relationship with your dealer. If you are shopping around for cars at multiple dealers, you should do the same when it comes to car loans. Compare multiple offers and get a financing offer that makes sense to you.