Are you looking for a new luxury vehicle? If so, are you worried that you may have to pay a high interest rate to get the car you want? In other words, have you ever wondered, “Is there a BMW dealership near me that has the luxury automobiles I’m interested in and that can explain how my auto loan interest rate will be determined?”
If you have asked yourself that question, the answer is, “Yes, there is!” We are one of the BMW dealerships in Massachusetts that has a full inventory of new and pre-owned luxury vehicles for you to choose from. We’re also a BMW dealership that believes transparency is our best friend when it comes to financing.
We work with a wide network of lenders to get customers the financing they need to buy or lease the BMW automobiles they desire. Given our experience, we know what lenders typically base their decisions on, including how they determine the interest rate you’ll need to pay.
Here are the factors lenders normally look at when they’re determining the interest rate on your auto loan:
- Credit Score: Lenders consider your credit score to be an indicator of your financial responsibility. The higher you credit score is, the more likely it will be that you will get a lower interest rate on your auto loan.
- Debt-to-Income Ratio: Your debt-to-income ratio is a comparative measure of the amount of debt you have in relation to the amount of money you earn. If your income exceeds your debt by a wide margin, it will increase the odds that you’ll get a lower interest rate on your loan.
- Loan Amount & Down Payment: As a general rule of thumb, your interest rate will be lower if you borrow less money and put more money down on the car you want. Borrowing more money and putting less money down exposes a lender to more risk, which will ordinary increase your interest rate.
- Age of Car: You’ll normally pay a higher rate of interest on a car loan if you buy a pre-owned car. This is because previously owned cars have already started to depreciate in value whereas new cars haven’t. It’s also because loans for pre-owned vehicles often have shorter terms, which means lenders have less time to make money over the course of your loan.
- Term Length: You’ll normally get a lower interest rate if you agree to pay off your loan in a shorter period of time. While agreeing to pay your loan off faster may save you money in the context of interest, it will typically increase the amount of your monthly car payment for the duration of your loan’s term. Keep this in mind before you sign a contract for a car loan.
If you want to learn more about how you can finance a new or pre-owned BMW vehicle, visit our Greater Boston-area BMW dealership. We’ll discuss your situation and explain your options to you in detail. Stop by BMW of Peabody today.