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Why is my interest rate so high on my car loan despite my excellent credit?
"I recently bought a car from my local dealer who worked out the financing for me. It is a great car and the payments are affordable.
That being said, I keep seeing that people with an okay credit score are getting approved for four to five percent interest rates, and yet I could only get approved for 12% despite having nearly perfect credit.
"
Johnny Puckett · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“Your credit score is but one thing that lenders look at. They also take into account your monthly gross income, employment history, debt-to-income ratio, and credit history.
If this is your first month on the job, if you have low income, if you have a high amount of debt, or if this is the first car you’ve financed, the lender will consider you to be high-risk and charge you accordingly.
Interest of 12% is really high, but since you’ve already bought the car, you can make your payments on time for six to 12 months and then refinance at a lower rate.
“
View full answer
- Gregory R.
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