What is the Deal with Bad Credit and Auto Loan Rates?
A bad credit score cannot keep you from getting a car. However, if you follow tips such as improving your credit score, choosing a short-term loan and buying a used car, you can surely obtain lower interest rates than before. Understand the link between bad credit score and interest rates to save some dollars on the deal.
The interest rate for bad credit car buyers will always be higher than a good credit individual. The primary reason being that a lender is taking a risk by lending money to someone who has difficulty in repaying the money or maintaining a healthy credit score. Before you step into a dealership to check out car models, you should check your credit score. It is the key element in deciding the amount of interest rate that you will have to pay for your car. Bad credit buyers should think one step ahead and ascertain the average interest rate according to their credit score in order to avoid any surprises later.
Bad Credit Score and Auto Loan Rates: How Bad is Really Bad?
Any credit score above 620 is considered to be decent and will attract reasonable interest rates. However, for people who have a credit score of 620 or lower, the credit score is considered to be poor. According to nerdwallet.com, a subprime credit score, which ranges from 501 to 600, will give you an interest rate of 16.14% for a used car and 11.89% for a new car.
While a deep subprime credit score of 300-500 gives you an interest rate of 19.98% for a used car and 14.41% for a new car. For credit challenged people, it is ideal that you build your credit score and bring it close to 601-660 so that you can achieve a lower interest rate on the purchase of your car.
Bad Credit Auto Financing Tips that Will Save You Dollars!
1. Check & Improve your Score
Before you start thinking about the details of your car, it is wise to check your credit score. Knowledge about your credit score will give you an estimated idea about the interest rate. If you have time before you apply for your auto loan, always take actions that will boost your score and help you to negotiate lower interest rates. Display a strong payment history by clearing your debt. Pay off credit card balances and keep them low. You should also avoid taking any new credit until the auto loan is approved.
2. Short Loan Term is Favorable
If you have suffered from bad credit history, do not go for a long-term auto loan. A term of 72 months or more will force you to shell out more money in the long run. It is because you will have to pay a higher amount towards the interest. Alternatively, choose a shorter term to reduce your financial charges significantly. An ideal term period is close to 60 months. However, bad credit auto buyers can even go for 48 month or 36 months to get a competitive interest rate.
3. The New Vs. Used Debate
The difference between a new car and a used car can be felt in the pricing as well as the auto financing rates. One may argue that new car loans come with lower interest rates and so it is wise to choose a brand-new model. However, the high cost of new cars can cause trouble. Individuals with bad credit should opt for used cars as the pricing is affordable and approvals are easy to obtain on pre-owned cars. Bad credit will hike up your interest rates than normal. Choose to go for a new car only if you are ready to make significant down payment.
Improve Credit Score to Decrease Auto Loan Rates
While an interest rate is decided on multiple factors such as the amount of the auto loan, term period and down payment, the most important factor is your credit score. Always make an effort to keep a consistently good credit score. Once you improve your credit score, your interest rates will automatically decrease and you can move forward to purchase your favorite car.
Bill Gates Is On His Way To Becoming The World's First Trillionaire!
Could we really see the world's first trillionaire in our lifetime?
A new report on inequality published by Oxfam suggests Bill Gates could become a trillionaire in the next 25 years, however, one critic has called the claim 'ludicrous.'
The Microsoft co-founder is already worth $85 billion, according to Forbes. But if Gates' wealth continues to appreciate at the rate of return it has been for the past decade, then by the time 61-year-old Gates hits his 86th birthday, he should be worth a trillion dollars.
The 61-year-old Microsoft founder, who was the world’s youngest billionaire in 1987 at the age of 31, could be worth $1,000,000,000,000 by the year 2042, the report has claimed.
Oxfam says the wealth held by the super-rich since 2009 has increased by an average of 11 percent per year, using this average rate of growth to make its prediction.
“Once a fortune – or capital – is accumulated, it can grow quickly. The super-rich can achieve returns that are not available to the ordinary saver, helping the gap to grow between the wealthy and everyone else,” the report says.
If Gates' investments continue at that growth rate, then Gates, or perhaps another billionaire close to his level, will become the world's first trillionaire. That's even with the billions Gates has given away to charity. As of 2013, Gates had given away $28 billion to the Gates Foundation, which helps fight worldwide poverty.
However, economics expert Tim Worstall, a Forbes contributor, argues that Oxfam’s claims are ‘ludicrous.’
Looking at the numbers, Worstall explains: “In the proper jargon they are confusing a cycle in the economy with a structural feature of the economy."
“Bill Gates, to be world's first trillionaire soon? Most likely, in fact almost certainly, the answer here is 'No'," he concludes.
Using the same rate of return, and assuming Gates doesn't do something like suddenly give away most of his fortune, and using the same start date of 2006 when Gates was worth a mere $50billion, that means in 25 years, he would be worth $133billion, according to Worstall's estimation.
The Oxfam report concludes that “eight billionaires own the same wealth as the 3.6 billion people who form the poorest half of the world's population.”
Mark Goldring, Oxfam GB Chief Executive, said: “This year's snapshot of inequality is clearer, more accurate and more shocking than ever before. It is beyond grotesque that a group of men who could easily fit in a single golf buggy own more than the poorest half of humanity."
“While one in nine people on the planet will go to bed hungry tonight a small handful of billionaires have so much wealth they would need several lifetimes to spend it. The fact that a super-rich elite are able to prosper at the expense of the rest of us at home and overseas shows how warped our economy has become.”
As the world's richest man is likely to becoming the world's first trillionaire, there have been plenty of Twitter jokes too: