Not every car buyer is able to pay the car completely upfront on their dealership visit. Our Toyota financial service in Baltimore, MD helps buyers make manageable monthly payments.
Ideally, you want to secure a good APR on a car loan. What exactly constitutes a desirable APR?
What Is APR?
First, let’s go over what APR means. APR stands for annual percentage rate. People tend to confuse it with interest rate, but it’s not the same. The two are very similar; the difference lies in the way they’re calculated.
APR is the total cost of the loan over the course of a year, which includes not only the interest but also any associated fees, such as broker fees.
In this instance, the associated fees involved are also a part of the loan, which means you pay interest for that as well.
What Is a Good APR?
Like interest rates, the lower the APR the better. There’s no single percentage that’s best. It really depends on your existing credit score and also whether you’re buying a new or pre-owned car. Other factors include the length of the loan, your down payment amount, and the vehicle’s make and model.
Generally, if you have a good credit score, 661 or higher, then a good APR is 4.96% and 6.36% for a new and used car purchase, respectively.
If your credit score is poor, below 500, then expect an APR around 10.3%. If your credit score is below 661, we suggest spending at least three months, preferably longer, to get the score up before even visiting a dealership.
Visit Heritage Toyota Catonsville
Come by Heritage Toyota Catonsville to see our inventory, which includes popular models like the Toyota Corolla and more. Our finance department can give you an idea of the loans you’re eligible for.
