What would my apr be?

Question

I have a credit score of 580, but no credit card debt. I'm in the process of paying off my other debt. My car is paid for and I was wondering how much my apr be to buy a car worth 11k?

Answer 1

Best Answer - Chosen by Voters

Sunny,

When you have sub prime credit – a 580 Score - there is allot that goes in to determining your rate. Based on the information you provided it is hard to estimate your rate but I will try and provide you some guidelines so you can estimate your own rate.

Most sub prime lenders use the SAW principle in addition to your score when determining your rate, they also consider the LTV (Loan to Value). All these are used to determine the risk of the loan.

SAW = Stability, Ability, and Willingness to Pay.

How to estimate your interest rate with a 580 score; Start with a rate of 18%.

Stability: If you have over two years on the job, lower your rate by a point, if you have less than one year on the job raise it by a point.

Ability: If the payment on the 11K car is near 20 percent of your income, add a point, if it is less than 15% of your income, subtract a point.

Willingness: If you have a credit history over five years with previous items that were paid prior to your “other debt” subtract a point, if you have a credit history of less than three years add a point.

LTV: If you borrow over 12K (not including GAP insurance and a service contract) on the 11K car, add a point, if you finance less than 10K on the 11K car subtract a point. In other words, if you buy the 11K car with nothing down and the bank has to finance the car, taxes, and registration fees your rate will be higher than if you trade your car in, (assuming your trade is worth the taxes plus $1,000)

Source(s):

12 years experience in sub prime auto loans.

Answer 2

580 is definitely not the worst credit score in the world, but it is definitely considered sub-prime. You should be able to qualify for a car loan, but it will be at a high interest rate. You're probably going to pay around 21% APR at a reputable used car dealership.

The good thing is, if you make all of your car payments on time, and no other negatives are added to your credit report, your credit score should improve in time. After 12 to 18 months, you should be able to refinance your auto loan at a lower interest rate.

Source(s):

Been there, done that.