According to 2016 Auto Financing Report from WalletHub, buyers who have fair credit will end up spending about six times more to finance a vehicle than someone with excellent credit, which equates to $6,304 in additional interest payments over the life of a $20K, five-year loan. As the auto industry witnessed its highest sales in 15 years, WalletHub realeases a study to help you make an informed decision about your next vehicle. Here are other key findings:
- Interest Rates: For new cars, interest rates are at their lowest point in the past three years, with the average new-car loan today charging 17 percent less interest than the average used-car loan.
- Credit Standing: Buyers with fair credit will end up spending about six times more to finance a vehicle —about $6,304 in additional interest payments over the life of a $20,000, five-year loan — than consumers with excellent credit.
- Financing Sources: Consumers in the market for a new car should begin their search for financing with car manufacturers (rates at 38 percent below average) and credit unions (rates at 29 percent below average). Secondary options include national banks (rates at 2 percent above average) and regional banks (rates at 30 percent above average).
- Transparency: Car manufacturers continue to lack transparency when it comes to leasing offers, with the average automaker receiving a WalletHub Transparency Score of 4.68 out of 10.