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Why your Spouse's Car Loan is Cheaper than yours

Why your Spouse's Car Loan is Cheaper than yours

Today is customer question day. This question is something we have covered before but we think it’s important enough to want to cover again, the question was, ‘My husband's car loan is cheaper than mine, why? We both earn the same and have similar jobs but he would pay less, why?


We tasked our Cayuga auto loans team to explain why two people in similar situations will pay different rates for a loan.


What influences the cost of a car loan?


On the surface, you would think two people of a similar age, with similar backgrounds who earn similar amounts would qualify for a similar car loan wouldn’t you?


But there’s more to determining the cost of a car loan, including:


Stability of job – If one person has been in their job for many years and one has just started a new job, that can make a difference. Time in role indicates potential stability and indicates the longer serving person is more likely to be able to complete the loan, even if it isn’t true.


Type of employment – Some careers are regarded as riskier than others. There is also a difference between how being an employee impacts a loan over being a contractor, self employed or a company director.


Credit score – Many things influence your credit score and your score influences the overall cost of a car loan. The higher the score, the lower the interest rate. The lower the score, the higher the rate.


Payment history – If one has never missed a payment but the other has missed one or made a late payment that was reported, that will impact the credit score and interest rate.


Income – Any difference in income can make a different to the cost of a car loan. If the difference impacts affordability in any way, it can make the loan cheaper or more expensive depending on the situation.


Credit utilization – The amount you have outstanding on your credit cards can also influence how expensive a car loan might be. The more you owe to cards, the higher your credit utilization is. This impacts your ratio and affordability, which feeds into how much you might pay on the loan.


The loan terms – Even a minor variation in the loan terms you get prequalified for can make a difference. For example, longer loans get lower rates, shorter loans get higher rates, larger down payments get lower rates, smaller down payments get higher.


There’s a lot that goes into deciding how much a car loan, or any loan for that matter, will cost.


The aspects above aren’t a complete list but it gives you an idea of why a car loan is cheaper for one person than it is for another.


It’s nothing personal, lenders do stranger things than assess two similar people in different ways!


When you’re ready for a car lease or loan, get in touch with the Cayuga auto loan experts at Northway Ford for great deals on auto finance.


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Categories: Car Loan

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