If you’re considering applying for an auto loan, you may be wondering, “What is a good interest rate for a car loan?” Keeping your credit score in mind, review the chart below and read on to learn more about getting the best possible rate, so you can drive home in the new or pre-owned vehicle you want. When you’re ready, contact our finance team near Rye and we’ll help you move forward with the next steps.
|Average New-Car Loan||Annual Percentage Rate||Average Used-Car Loan||Annual Percentage Rate|
The average interest rate for a three-year loan varies depending on whether you buy new or used. The average ranges from 3% to 4.5% for new cars—partly because new car buyers tend to have better-than-average credit. But the average used car loan interest rate is significantly higher, at roughly 8.5%.
You may receive a different offer depending on your credit score and the lender. The best way to compare auto loan interest rates is to explore your options and choose the offer that makes the most sense for your finances.
If you’re anything like most of those who drive with our dealership, the average used car loan interest rate is probably a bit higher than where you’d like to be. So, how can you move into the range where the best used car loan rates become available? Here’s what you should keep in mind:
Make sure you understand the other terms surrounding the auto loan and auto loan rates; don’t focus on the payment alone. It’s also worth noting that the faster you pay off your loan, the less you’ll spend on interest. Taking out a longer loan might seem like the right idea if it gets you a lower payment, but you’ll end up spending much more than you had to.
Our payment calculator tool can help you see how good, bad, average car loan interest rates impact your monthly payments.
Used car loan rates as low as 3.8% are certainly not unheard of, but how low can you really expect your interest rate to go? If your credit score falls between 661 and 780, we think it’s a good idea to shoot for an interest rate of 5% or lower. This will put you well below the average, even compared to other drivers in this credit range.
Maybe 5% still seems unattainable; what is a good APR for buying a used car if your credit still isn’t where you’d like it to be? It’s not a bad idea to keep shopping until you can get a rate of 8% or less. If your interest rate ends up being on the high side, take steps to reduce your total interest costs by making a larger down payment, trading in your current vehicle, and paying off your loan as fast as possible.
If you’re planning to buy new and your credit is strong, there isn’t much of a difference between good rates and average ones. But if your credit isn’t where you’d like it to be, you can work to improve it before you apply.
Now that you know the answer to the question, “What is a good rate on a car loan,” our finance center can help you move forward with the pre-approval and financing processes. If you have additional questions or want to find out what counts as good mileage on a used car, don’t hesitate to contact us! You’re also welcome to visit us near Stamford and New Canaan for in-person assistance.
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