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What sort of auto loan interest rate can I expect?
Rewinding a about 2 years and a half years back, I had no credit history, was fresh out of college with a masters degree in EE, and landed my first real job so I decided to start "shopping" for credit cards to start building credit. I had/have no student loans. I was declined for a few of the popular cards (Chase Freedom, American Blue Cash), but was accepted for the Discover it card with a $500 balance. Reading a few sites I found that it's best to keep utilization low to raise my credit scores so I paid off throughout the month and left a small amount to be reported on my monthly statement which gets reported to the agencies. I've successfully requested two balance increases since first obtaining the card to make the utilization target a bit easier to reach and am now up to a $5000 limit. According to Transunion and Equifax I have a utilization of 3% and 2%, respectively. I don't carry a balance, I've been employed with a real job for just over 3 years, make decent money (engineering field), and have never missed a payment. Ever since Discover introduced the free FICO score I've been following it and was impressed when I reached 790. According to TU and EF I am around 730-740.

My vehicle was recently hit by another vehicle and the other person's insurance company has sent me a check to fix it since I was not at fault. I think the check is more than I could conceivably receive from a dealer if I trade in my vehicle after getting it fixed, so I'm throwing around the idea of purchasing a new car. I've been casually browsing the past year or so anyway since. I wasn't in a hurry to purchase since my car still runs, but I'd like to get something more comfortable and quiet since I drive. A LOT.

Just to get an idea of what sort of rate I could get I applied for a car loan at PenFed and was rejected. The reason was that I have too few accounts paid as agreed which I understand (as much as I hate the wording). Maybe that wasn't a smart idea, I don't know.

So I went through the Credit Karma pre-approval thingy-majig and Avant estimated I would be approved with a rate starting around 10% (for a 36 mo. loan). It got higher as duration increased. HOLY COW.

Now I do not *need* a loan for a car, but I figured if I could get a decent rate I would play the game to build credit. Eventually I plan to purchase a home so I'd like to increase my score and strengthen my credit in preparation. This could be a while from now though, perhaps 5-10 years, I really don't know yet.

As much as I'd like to build my credit history, such a rate is just unacceptable to me and I would go to the dealer and pay cash (which I can do). Am I realistically looking at around 10% APR for a car loan based on my history?

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I would check with a dealer that advertises to work with all credit situations. You have thin credit and that can be leary to many lenders. Ten percent sounds pretty high though. If you currently only have one account being reported to the credit bureaus you should work on getting more accounts. Two more credit cards would be a good idea, BUT if you are going to go ahead and try to get an auto loan you may want to wait on that. Don't forget that if you do get a loan at an unfavorable rate you can always refinance in a year to get a better rate as long as you don't owe more than the car is worth.

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