Best Auto Loan Rates in Burbank
At UMe, we consider ourselves more “helpers” than “bankers.” That’s why we want to help you understand what you can expect to pay when you get an auto loan.
When looking to buy a car, auto loans may seem like a financial mystery.
How is your seemingly random rate calculated? And why do you pay more for your monthly car payment than your neighbor? You drive similar cars, and you’re both UMe members. (Congrats on the latter, by the way!)
For the potential car buyers out there, we can help clear up the mystery around auto loans for you. Let’s take a look at what a car loan rate is and the different factors that go into determining your auto loan rate and monthly payment.
How Are Car Loan Rates Determined?
Auto loan rates are determined by many factors. These factors include:
- Your credit score
- The amount you’re requesting for your loan
- The vehicle’s age and mileage
- The loan term (AKA the life of the loan)
Currently, the national average for auto loan rates is 4.21% on 60-month loans. Depending on your credit score and a combination of the factors mentioned above, you can expect an auto loan rate to be at, above, or below the national average.
However, two of these factors are particularly important for you to pay attention to because they’re most directly under your control: your vehicle’s age and condition and your credit score.
How Does Vehicle Age And Condition Impact Auto Loan Rates?
When applying for an auto loan, you’ll notice that used car loans come with higher interest rates. Because the value of a car depreciates dramatically over time, a lender will typically charge more interest for a used car to cover the potential loss if, (worst-case scenario) they end up having to resell your vehicle.
When deciding between a new or used car, be sure to factor in the typical auto loan rates that come along with each, in addition to the sticker price.
Check out our new and used vehicle rates
How Does Credit Score Affect Car Loan Rates?
Car loan rates are largely based on the strength of your credit score. And your credit score is affected by things like your payment history on past lines of credit (like credit cards and school loans). When applying for a Burbank auto loan, your credit is pulled and your score reviewed. Your score will determine the car loan rates you’re eligible for.
FICO scores range from 300-850. A person with excellent credit, scoring around 720 or higher, is considered a “super-prime” or “prime borrower”. Credit scores of 620 or lower are considered “subprime.”
If you’re a super prime borrower, you’ll likely be approved for optimal auto loan rates. If your credit score hovers in the range of 600–700, yep, you guessed it – your car loan rates will be slightly higher.
If you don’t have the best credit, never fear. You can still get a Burbank vehicle loan, but you’ll pay higher interest.
5 Tips To Improve Your Credit Score For Better Loan Rates
Better credit scores can help you obtain more competitive loan rates. If you’re looking to become a loan applicant but find that your credit score is less than stellar, consider these tips to improve your credit.
1. Check your credit report
Knowledge is power, and it all starts with having access to and understanding your credit report! Based on Federal Trade Commission (FTC) guidelines, you’re entitled to one free copy of your credit report every year. You should definitely take advantage of this! Request a free copy of your credit report, and check it for anything unusual, including errors and fraudulent accounts.
2. Make your credit payments on time
Your payment history is the single most important factor in determining your credit-worthiness and ability to lock-in excellent auto loan rates. Set calendar reminders for bills. Or, if possible, take advantage of autopay options so you never miss a payment. Seriously, don’t miss your payment!
3. Aim to pay down debt each month
Make it a point to reduce debt and keep accounts open to build a positive history. Don’t just transfer balances from one card to another. If you can, pay more than just the minimum amount on your credit statement to start chipping away at your balance. Every penny counts!
If you want to know how long it will take you to pay off credit, check out this debt repayment calculator to plan ahead and keep yourself on track.
4. Maintain a low credit utilization ratio
Once your debt is down, you can still use your credit. However, you should avoid charging anything you can’t afford to pay right back. The rule of thumb is to keep your debt to under 50% of your available credit. It’s not impossible; it’s achievable!
5. Don’t open credit you don’t need
The age of your credit—how long you’ve had a credit card, for example—and requests for new credit impact 25% of your FICO score. That means that opening new credit to increase your available credit isn’t wise, especially if it’s not necessary.
While new credit could increase your available score—therefore lowering your credit utilization ratio—this approach could easily backfire. Your new credit could ultimately lower your score by decreasing the average age of your credit and adding a new credit inquiry to your history. Basically if you’re looking for a new loan, maintaining your existing credit lines is a better strategy than getting more credit.
Choose UMe For Great Auto Loan Rates In Burbank
The right Burbank car loan rates for you should be competitive with flexible terms. Whether you have good credit or bad credit, let us help make auto loan rate shopping easy. We offer Burbank car loans to anyone who lives, works, goes to school, belongs to a club, or worships in Burbank.