What is the Maximum Rate for a Car Loan in Texas?

According to the Office of the Attorney General for the State of Texas the maximum rate for a car loan in Texas is 18 percent. That rate is usually reserved for a borrower who has bad credit. Let’s have a look at what an interest rate of 18 percent does to a loan balance.

Who Faces the Highest Rates?

Usually, the borrowers who are facing the highest interest rates are those who have bad credit. Not just bad credit in general, but have been irresponsible with previous car loans. The major providers of credit scores have targeted scores…a specific score for a mortgage, another for credit cards, and one for auto loans. If you have a history of late payments or a repossession, your auto specific credit score could be as much as 120 points lower than your general credit score.

Total Interest Paid

The average cost of a new car in the United States is $30,000. If you have to pay the maximum rate of 18 percent on that amount for just six years you will pay a total of $19,264.83 in interest. Even if you choose to buy an less expensive model, say a Kia Rio, that retails for around $15,000 you will pay $9,632.41 in total interest over the life of a six year loan.

What Can Be Done

You have two options if you are facing an interest rate that seems too high. First, you can improve your credit. You cannot go back and undo past mistakes, but you can let them fade. Late payments and repossession may stay on your credit report for seven years, but their impact on your credit score lessens over time. While you are waiting for these past infractions to fade, why not get a credit card? Even if you have to get a secured card, your score will improve if you make your payments on time and keep your balance under thirty percent of the credit limit.

Your second option is to shop around for a better loan offer. Granted, if you have bad credit, you will have to skip large banks and some credit unions. That does not mean you have to accept the first offer you get. There are many specialty lenders who are willing to offer you a loan. Many of them operate online only, making your search even easier. Go here to apply online–today!

What Are The Best Used Car Dealers in Houston?

Buying a used car can be a tricky experience. Everyone is sure that the dealership is out to stick them with a lemon of some kind or another. That makes the reputation of the dealership all the more important. Here at Longhorn Auto Finance, we set out to discover which Houston-area dealers had the happiest clients last year. We evaluated reviews from leading sources such as Yelp and BBB, in order to provide an objective viewpoint. Here are the three best used car dealers in the Houston area based on customer feedback.

South Loop Hyundai
8811 the Lakes at 610 Drive
Houston, TX 77054

Expo Motor Cars
11655 North Fwy
Houston, TX 77060

AutoNation Family of Dealerships
Multiple locations along the Gulf Fwy.

Each of these dealerships has received multiple positive reviews from customers in the last 12 months. Keep in mind that a positive review is no guarantee of your experience. Be sure to inspect the car you are interested in. If you do not know what to look for, take the vehicle to an independent mechanic.

Used Car Budgeting: Your Responsibility

Although these dealers are known for their happy customers, the responsibility to budget appropriately for your new vehicle rests largely–if not solely–on your own shoulders. Spending more than you should places undue strain on your finances, and causes you stress–and who needs more of that?

A good rule of thumb is to purchase a vehicle that costs a certain percentage of your annual income. For instance, spending 15-25% of what you make in a year on a car is reasonable. Spending up to 30% is probably the maximum you should invest. If you are financing your vehicle, you want your monthly payments to account for no more than 10% of your monthly income, and you want to keep your finance term as short as possible. Anything less than 60 months is sensible. If you want to learn more about financing a car in Houston, go here.

If you follow these guidelines, you’ll be happy with your purchase–and so will your bank account.