Sulaiman Abdur-RahmanUpdated March 22, 2023
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What Is an Interest Rate?
What Is APR?
Interest vs APR
What Determines the Average Auto Loan Rate?
New vs Used Car
How Average Interest Rates Vary for New and Used Vehicles
Average Interest Rates by Term Length
Average Auto Loan Rates for Excellent Credit: 781 to 850
Average Auto Loan Rates for Good Credit: 661–780
Average Auto Loan Rates for Fair Credit: 601–660
Average Auto Loan Rates for Bad Credit: 501–600
Average Auto Loan Rates for Deep Subprime Credit: 300–500
How Is Inflation Affecting Auto Loan Interest?
How to Get a Good Interest Rate on Refinancing an Auto Loan
Talking to Your Lender
Changing Your Terms
Auto Loan Refinancing Rates
Frequently Asked Questions
What is considered a good interest rate on a car loan?
Are interest rates on auto loans going up?
What is the average auto loan rate?
What is the average auto loan rate for a used car?
What is the average auto loan rate for a new car?
About the Author
Sulaiman Abdur-Rahman writes about personal loans, auto loans, student loans, and other personal finance topics for Lantern. He’s the recipient of more than 10 journalism awards and currently serves as a New Jersey Society of Professional Journalists board member. An alumnus of the Philadelphia-based Temple University, Abdur-Rahman is a strong advocate of the First Amendment and freedom of speech.
What Is the Average Car Loan Interest Rate? ›
According to Experian, the average rates for this category are 3.51% for new-car loans and 5.38% for used-car loans.What is a good interest rate for an auto loan? ›
|Credit score||Average APR, new car||Average APR, used car|
|1. MyAutoloan||5.04% for 72-month auto loans||Best Low-Rate Option|
|2. Autopay||2.99%*||Most Well-Rounded|
|3. Consumers Credit Union||5.64% for 72-month loans||Most Flexible Terms|
|4. PenFed Credit Union||5.84% for 72-month loans||Most Cohesive Process|
Car Loan APRs by Credit Score
Excellent (750 - 850): 2.96 percent for new, 3.68 percent for used. Good (700 - 749): 4.03 percent for new, 5.53 percent for used. Fair (650 - 699): 6.75 percent for new, 10.33 percent for used. Poor (450 - 649): 12.84 percent for new, 20.43 percent for used.
750 is a good credit score that can get you car loans with equally as good rates. They aren't the best, but they are still in the top five. More specifically, you would be able to qualify for apr rates of anywhere from 3% to 6% for a new car loan and 5% to 9% for a used car loan.Will auto loan rates go down in 2023? ›
In December of 2022, the Fed indicated that it expects the funds rate to fall to 4.1% by the end of 2024 after reaching the 5.1% mark by the end of 2023. If that holds true and the federal interest rate begins to fall, auto loan rates should start to drop shortly after.What is considered a high car payment? ›
Generally, however, a car payment is considered high if it exceeds 10-15% of a person's gross monthly income. This means that if a person earns $3,000 per month, a car payment that is greater than $300-$450 per month may be considered high.How much is a $40,000 car payment for 72 months? ›
If you take a car loan of $40000 at an interest rate of 4.12% for a loan term of 72 months, then using an auto loan calculator, you can find that your monthly payment should be $628. When the loan term changes to 60 months, the monthly payment on a $40000 car loan will be $738.83.Is 72 months too long for a car payment? ›
A 72-month car loan can make sense in some cases, but it typically only applies if you have good credit. When you have bad credit, a 72-month auto loan can sound appealing due to the lower monthly payment, but, in reality, you're probably going to pay more than you bargained for.Can you negotiate interest rates on cars? ›
Yes, just like the price of the vehicle, the interest rate is negotiable. The first rate for the loan the dealer offers you may not be the lowest rate you qualify for. With dealer-arranged financing, the dealer collects information from you and forwards that information to one or more prospective auto lenders.
Why is my APR so high with good credit? ›
Those with higher credit scores pose a lower default risk to issuers, and they tend to land better interest rates. Even if you have a higher interest rate and carry a balance, you can pay less interest on your credit card debt if you make payments whenever you can.Why are new car interest rates so high? ›
Automotive experts said there's a couple reasons why auto-loan costs are climbing. The Federal Reserve is still raising its benchmark interest rate in its continued fight against inflation, which is simultaneously pushing auto rates higher.What credit score do you need to buy a 50k car? ›
Some lenders use specialized credit scores, such as a FICO Auto Score. In general, you'll need at least prime credit, meaning a credit score of 661 or up, to get a loan at a good interest rate. If you have poorer credit, you can still get a loan, but you will probably have to pay more for it or else find a co-signer.How rare is a 750 credit score? ›
Your credit score helps lenders decide if you qualify for products like credit cards and loans, and your interest rate. You are one of the 46% of Americans who had a score of 750 or above in 2021, according to credit scoring company FICO. Here's how your 750 credit score can affect your financial life.Can I get a 20k loan with 750 credit score? ›
You should have a 640 or higher credit score in order to qualify for a $20,000 personal loan. If you have bad or fair credit you may not qualify for the lowest rates. However, in order to rebuild your credit you may have to pay higher interest rates and make on-time payments.Can you get 0% APR with 750 credit score? ›
The exact credit score you might need to qualify for a 0% APR loan varies depending on your situation. Many lenders require a minimum score of at least 700. Others require excellent credit scores, such as 720, 750, or even 800.Should I buy a car now or wait until 2023? ›
Americans planning to shop for a new car in 2023 might find slightly better prices than during the past two years, though auto industry analysts say it is likely better to wait until the fall. Since mid-2021, car buyers have been frustrated by rising prices, skimpy selection and long waits for deliveries.What is the best time of the year to buy a car? ›
In terms of the best time of the year, October, November and December are safe bets. Car dealerships have sales quotas, which typically break down into yearly, quarterly and monthly sales goals. All three goals begin to come together late in the year.What is a good credit score for a car loan? ›
Here's a quick look at how a good credit score can benefit you when you're buying a car. Lower interest rates. A good credit score — typically a score of 680 or higher — can help you secure a low interest rate from the dealer. In fact, taking your score from 600 to 780 could halve your rate.How much should I spend on a car if I make $60000? ›
How much should I spend on a car if I make $60,000? If your take-home pay is $60,000 per year, you should pay no more than $750 per month for a car, which totals 15% of your monthly take-home pay.
How much should I spend on a car if I make $40 000? ›
Follow the 35% rule
Whether you're paying cash, leasing, or financing a car, your upper spending limit really shouldn't be a penny more than 35% of your gross annual income. That means if you make $36,000 a year, the car price shouldn't exceed $12,600. Make $60,000, and the car price should fall below $21,000.
With a $1,000 down payment and an interest rate of 20% with a five year loan, your monthly payment will be $768.32/month.How much is a $30000 car payment for 72 months? ›
The total interest amount on a $30,000, 72-month loan at 5% is $4,787—a savings of more than $1,000 versus the same loan at 6%.Is 300 a month a lot for a car payment? ›
When browsing your options, keep in mind that financial experts will typically tell you to spend less than 10% of your monthly take-home pay on your car payment. That means if your take-home pay is $3,000 a month, plan to spend no more than $300 on your car payment.How much is a lease on a $45000 car? ›
How much is a lease for a $45,000 car? Using our calculator, we input a $5,000 down payment, an assumed $25,000 residual value, an interest rate of 7% and a term of 36 months (three years). It resulted in monthly payment of $606 before taxes.Is it bad to get 84 month car loan? ›
Although you'll have smaller monthly payments with an 84-month car loan, you'll ultimately pay more in interest. You also risk owing more on the loan than your car is worth and potentially large repair bills. Before choosing a longer auto loan term, consider a shorter term to save more overall.What is the best way to finance a car? ›
- The best way to finance a car is to check your credit report, compare quotes from multiple lenders, get preapproved for an auto loan and then negotiate the best price on the vehicle.
- Yes, you'll generally receive lower interest rates when financing cars through a bank or a credit union rather than through a dealer.
The 20/4/10 rule encourages consumers to put down at least 20% of the total price of their vehicle, which will lower the overall amount you borrow and reduce the interest you'll pay over the life of the loan. While there are no-money-down car loans, not providing a down payment can cost you more in the long run.How do you ask for a lower price? ›
- All I have in my budget is X.
- What would your cash price be?
- How far can you come down in price to meet me?
- What? or Wow.
- Is that the best you can do?
- Ill give you X if we can close the deal now.
- Ill agree to this price if you.
- Your competitor offers.
You can pay less interest on a car loan by shopping around for offers, making a large down payment, opting for a shorter loan term, making additional payments and declining extra coverage options.
How to get the lowest APR on a car loan? ›
The higher your credit score, the lower your interest rate. And if you're trying to qualify for the best rate the lender offers, an excellent score is usually required. You can pull your credit score and history from Equifax, Experian and TransUnion or for free at AnnualCreditReport.com.How do I get my APR lowered? ›
- Paying your bills on time.
- Keeping your balances low.
- Paying off any debt in a timely manner.
- Diversifying your credit mix if possible.
- Keeping overall credit utilization low.
If you want the best credit card APR possible, you might want to work on improving your credit score first. Once your FICO Score passes 670, your credit will move from “subprime” to “prime.” This means you'll become eligible for prime interest rates.What is the highest APR rate allowed? ›
There is no federal regulation on the maximum interest rate that your issuer can charge you, though each state has its own approach to limiting interest rates.What percentage of people pay $1000 car payment? ›
The average monthly payment for a new vehicle hit a record $730 in the first quarter, up from $656 in 2022. And 16.8 percent, or about 1 in 6 of them, are paying $1,000 or more a month — also a new all-time high.Are car interest rates going up 2023? ›
Cost to finance to remain high in the coming year
The concurrent increase of rates and decrease in vehicle prices will likely remain consistent through 2023. Rates are expected to continue to increase, explains McBride, “An active Fed will mean further increases in auto loan rates.”
Vehicles leases offer inflation protection
Residual value is the vehicle's deemed value at the end of the lease term — set at the start of the lease. Your buyout is set at the time you negotiate the lease and this is why buying out a lease right now is one way to actually “beat inflation”.
The company doesn't list a minimum credit score requirement for a Tesla auto loan or lease. However, borrowers with good or excellent credit have a higher chance of qualifying and getting a lower interest rate.Can you get a Tesla with 500 credit score? ›
What credit score do I need to finance a Tesla? Tesla does not state a minimum credit score for financing. However, as with other brands, you will have much better luck securing a lower APR if you have a better score. Try aiming for a credit score of 720 or higher to get the best possible rate.Can I get a 40k car with 600 credit score? ›
Documentation Requirements. Whether your credit score is 600 or 800, you will need to provide your lender with some documentation proving your ability to repay your loan. This includes: Proof of employment via a pay stub - you generally need to make at least $1,500 per month to qualify for an auto loan.
How rare is 900 credit score? ›
What percentage of the population has a credit score over 900? Only about 1% of people have a credit score of 850. A 900 credit score can be thought of as fairly unrealistic.Is A 900 credit score good? ›
For a score with a range between 300 and 850, a credit score of 700 or above is generally considered good. A score of 800 or above on the same range is considered to be excellent. Most consumers have credit scores that fall between 600 and 750. In 2022, the average FICO® Score☉ in the U.S. reached 714.How many people have over 800 credit score? ›
Your 800 FICO® Score falls in the range of scores, from 800 to 850, that is categorized as Exceptional. Your FICO® Score is well above the average credit score, and you are likely to receive easy approvals when applying for new credit. 21% of all consumers have FICO® Scores in the Exceptional range.Can I get $50,000 loan with 700 credit score? ›
You will likely need a minimum credit score of 660 for a $50,000 personal loan. Most lenders that offer personal loans of $50,000 or more require fair credit or better for approval, along with enough income to afford the monthly payments.Can I get a 50K loan with a 650 credit score? ›
For a loan of 50K, lenders usually want the borrower to have a minimum credit score of 650 but will sometimes consider a credit score of 600 or a bit lower. For a loan of 50K or more, a poor credit score is anything below 600 and you might find it difficult to get an unsecured personal loan.How big of a loan can I get with a 720 credit score? ›
You can borrow $50,000 - $100,000+ with a 720 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.What of the population has a 750 credit score? ›
A 750 FICO® Score is above the average credit score. Borrowers with scores in the Very Good range typically qualify for lenders' better interest rates and product offers. 25% of all consumers have FICO® Scores in the Very Good range.What APR should I expect with a 750 credit score for a car? ›
750 is a good credit score that can get you car loans with equally as good rates. They aren't the best, but they are still in the top five. More specifically, you would be able to qualify for apr rates of anywhere from 3% to 6% for a new car loan and 5% to 9% for a used car loan.What percent of people have above a 750 credit score? ›
What Percentage of the Population Has a Credit Score Over 700? The same data referenced above also reveals the percentage of the population with a score of over 700. According to FICO.com, approximately 59.2 percent of the U.S. population has a credit score range between 700 to 850.Is a 5% interest rate good on a car loan? ›
An interest rate of 5% is pretty good for a car loan! Generally, to qualify for that rate, you must have good credit, meaning a score in the range of 700-749. So bravo! However, if you were to wait to buy a car and work on improving your credit score, you may be able to get an even better deal.
Is 3.5% a good rate for a car loan? ›
What Is the Average Rate for Good Credit Auto Loans? According to data from the Q4 2021 Experian State of the Automotive Finance Market report, the average interest rate for good credit auto loans is around 3.5% for new car purchases and 5.4% for used vehicle purchases.Is 5% a good interest rate on a car? ›
If you can get a rate under 6% for a used car, this is likely to be considered a good APR.Is a 20% interest rate on a car bad? ›
“An APR of 20% is a bit steep, and you could probably get better financing terms from a bank or credit union. Dealerships tend to offer more expensive loans because of interest rate markups. When you choose to finance a car through a dealer, they basically shop for you by gathering offers from various lenders.Can you negotiate an interest rate for a car? ›
Yes, just like the price of the vehicle, the interest rate is negotiable. The first rate for the loan the dealer offers you may not be the lowest rate you qualify for. With dealer-arranged financing, the dealer collects information from you and forwards that information to one or more prospective auto lenders.What interest rate can I get with a 735 credit score? ›
Borrowers with an 735 credit score are considered to be relatively low risk when it comes to paying money back. Statistical default rates range from 4.6% for consumers in the 660-679 FICO Score range to 1.9% for those in the 720-739 range.How much is a 30k car payment for 72 months? ›
The total interest amount on a $30,000, 72-month loan at 5% is $4,787—a savings of more than $1,000 versus the same loan at 6%. So it pays to shop around to find the best rate possible.Is 2.9 APR good for a car? ›
If you're buying a new car at an interest rate of 2.9% APR, you may be getting a bad deal. However, whether or not this is the best rate possible will depend on factors like market conditions, your credit background, and what type of manufacturer car incentives there are at a given point in time on the car you want.Why are auto loan rates so high? ›
Automotive experts said there's a couple reasons why auto-loan costs are climbing. The Federal Reserve is still raising its benchmark interest rate in its continued fight against inflation, which is simultaneously pushing auto rates higher.What's the worst interest rate for a car? ›
|Credit score||Average APR, new car||Average APR, used car|
If your credit score is in the 600 to 660 range, a car loan with an interest rate of 8% is good! However, if your score is higher, then an 8% interest rate is on the expensive side.
Is 10% interest on a car bad? ›
Keep in mind that, if you agree to a loan with a 10% interest rate, you will likely be paying thousands of dollars in interest over the course of the loan. If you can wait to take out a loan until you've improved your credit score, that might be the best (and least expensive) choice.Can I get a car loan with a 715 credit score? ›
Ultimately, a 715 credit score will not be a barrier to purchasing a car, but it won't secure you the best annual percentage rates — those below 5% for a new car — which will likely go to people with a score above 780.What APR will I get with a 600 credit score? ›
|Credit score||Average APR, new car||Average APR, used car|
|Deep subprime: 300-500.||13.42%.||20.62%.|
|Source: Experian Information Solutions.|
|Company||Forbes Advisor Rating||Minimum rate|
|Digital Federal Credit Union (DCU)||3.7||5.74%|
|Alliant Credit Union||3.6||6%|