What is the Maximum Auto Loan Interest Rate in Tennessee?

The General Provisions as set forth by the Tennessee legislature have set the maximum auto loan rate in Tennessee as the lesser amount of 24 percent or 4 percent above the prime rate as set by the Federal Reserve. Let’s have a look at who may have to pay the highest interest rate in Tennessee, how that rate can impact your wallet, and what options you may have.

Who Faces the Maximum Rate

The only people who may have to pay the maximum auto loan interest rate in Tennessee are borrowers who have a poor history with auto loans. Bad credit auto loans with the highest interest rates are usually reserved for borrowers who have made multiple late payments on previous car loans or who have had a repossession within the last two years. On the other hand, if you have bad credit in general, but have made all of your auto loan payments on time in the past, you should be able to avoid the top rate.

How The Highest Rate Impacts Your Wallet

Paying the highest auto loan rate will impact your wallet in two ways: your monthly payment and the total interest paid that you will pay. In order to show you how hard the impact will be, let’s model a loan. The loan is for $20,000 over a term of 60 months. If you are required to pay the 24 percent rate, your monthly payment would be $575.36 and you would pay a total of $14,521.56 in interest over the life of the loan. That same loan at today’s prime rate of 2.68 percent would have a monthly payment of just $356.64 and the total interest paid would drop to $1,392.21.

Your Options

Fortunately, with bad credit auto loans, time is often on your side. So, your first option is to wait before purchasing a car. The reason is that late payments and repossessions begin to have less of a negative affect on your credit score as time passes. The impact from late payments begins to fade six months after you start making your payments on time. Repossessions take a bit longer; impacting your credit score quite hard for two years after all legal filings have been made.

While you wait, you can begin to build a positive payment history by obtaining a credit card. Even if it is a secured card, making all of your payments on time and keeping the balance under thirty percent of the credit limit will boost your credit score after just six payments.

If you can’t wait, then you will want to shop your auto loan around. The best place to look, if you want to avoid the maximum auto loan interest rate in Tennessee, is online. There are many specialty lenders who operate online only, keeping their costs down, so they can offer auto loans to riskier borrowers.

When Will Electric Cars Be Affordable?

Electric cars may very well be the future of the automotive industry, but that could be many years off. The key is making electric cars affordable and practical for everyone.

First, let’s look at a little bit of history. Electric cars are not new. The first all electric vehicle was made in 1828 by Anyos Jedlik. The first all electric vehicle made in America was produced by Thomas Davenport in 1834. An all electric car held the world land speed record until 1900. So, electric vehicles are not a new invention. The obstacles to mass production then were a low top speed, short range, and inability to recharge the fuel cells.

EV Barriers to Success:  Range and Affordability

Today, the top speed and recharging issues have been solved, but short range and affordability are holding electric cars back. It is very possible that solving the range issue will solve the affordability problem as well. Battery technology is crucial to this, and innovations are being made at a rapid pace. To boot, the range component may be more of a perceived issue versus an actual one, as the Union of Concerned Scientists recently found that 42% of American households could switch to an EV with no change in driving habits.

Remember, every bit of new technology hits the market with a high price. As a larger market develops for the product, the price usually drops in order to sell in volume; the theory being that the profit from volume will outstrip the profit per item. This theory has been proven out for centuries.

Now back to electric cars. When the range of an electric car becomes sufficient to meet the daily driving needs of a wide range of Americans, more Americans will want to buy them. That should take us back to the volume sales over profit per item theory. When there is a larger market, electric cars should become more affordable for all. Given that an all electric car now costs about 40 percent less than one did just ten years ago, it seems as if this theory is proving itself, albeit slowly. Before the year 2020, it’s conceivable that a manufacturer will introduce a mass-market, low-price EV that’s affordable for the majority of new car-buyers.