The average interest rate for a car loan is currently between 5.38% and 21.57% depending on your credit score. So, if you're looking for a good APR on a car loan, your results may vary depending on your credit background.
Your annual percentage rate, or APR, is the interest rate at which you’re charged for the whole year when you borrow money. In most cases, your credit score will be the largest determining factor in the rate you qualify for, but other things can affect your interest as well. Here's what you need to know.
What's a good interest rate on a car?
If you can land an interest rate under 4% for a brand-new vehicle, that's generally considered a good deal. The actual rate you get for a new car, depending on your credit score, could be anywhere around 5.38% to 15.62%, on average, representing the difference between Super Prime and Deep Subprime credit, according to the latest data from Experian for Q1 of 2024. There may also be 0% financing deals from captive lenders if your credit is good enough to qualify.
For used vehicles, the average interest rate can range from 6.80% APR with Super Prime to 21.57% for Deep Subprime. If you can get a rate under 6% for a used car, this is likely to be considered a good APR. The actual interest rates you can qualify for vary depending on your credit rating, the loan term, the type of vehicle you’re financing, and more.
Generally, borrowers with good credit scores have a better chance of qualifying for a lower interest rate. A poorer credit score can mean more risk for the lender, which may lead them to charge more. Very short loan terms may also be more likely to have higher interest rates.
New cars tend to have lower interest rates than used vehicles because previously owned ones have a higher risk of mechanical failure due to wear and tear. The higher APR may give the lender a cushion since it can be hard to determine the exact value of a used car.
What Affects an APR for Car Loans?
Can you get a better interest rate?
The best way to secure a lower APR is by having a good credit score. Your FICO score serves as a quick way for lenders to evaluate your ability to repay a loan, so a better credit score can indicate that you’ve got a good history of repaying credit.
In addition, you can rate-shop with multiple lenders in a short window, typically 14 days. When you apply with a lender, they do what’s called a “hard inquiry,” which means they request to look at your credit reports. A single hard inquiry usually drops your credit score by around five to 10 points.
But, when you apply for the same type of financing with more than one lender within about two weeks, only one hard inquiry impacts your credit score. All hard pulls are reported to your credit reports, but only one lowers your credit score if done correctly.
Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.
FAQs
The average car loan interest rate currently is 9.56%. Auto loan annual percent rates (or APRs) are the most common rates you'll see advertised on auto loan sites. APRs include your interest rate along with the fees and other costs that come with the loan.
What is a good APR car loan? ›
Generally, a good APR for a car loan might look something like this: Excellent Credit (750+): 3% or lower for new cars, 4% or lower for used cars. Good Credit (700-749): 4-5% for new cars, 5-6% for used cars. Fair Credit (650-699): 6-7% for new cars, 7-8% for used cars.
Is 24.99 APR high for a car loan? ›
A 24.99% APR is not good for auto loans. APRs on auto loans tend to range from around 4% to 10%, depending on whether you buy new or used.
What is a good APR for a 72-month car loan? ›
Compare 72-Month Auto Loan Rates
| Lender | Starting APR | Award |
|---|
| 1. MyAutoloan | 6.99% for 72-month auto loans | Best Low-Rate Option |
| 2. Autopay | 5.69%* | Most Well-Rounded |
| 3. Consumers Credit Union | 5.99% for 72-month loans | Most Flexible Terms |
| 4. PenFed Credit Union | 4.74% for 72-month loans | Most Cohesive Process |
1 more rowAug 31, 2024
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.
Can you negotiate APR at a dealership? ›
Yes, just like the price of the vehicle, the interest rate is negotiable. Dealers may not offer you the lowest rate that you qualify for. To get the best interest rate, shop around with multiple lenders and negotiate.
What interest rate can I get with a 800 credit score car loan? ›
Average car loan interest rates by credit score
| Credit score | Average APR, new car | Average APR, used car |
|---|
| Superprime: 781-850. | 5.25%. | 7.13%. |
| Prime: 661-780. | 6.87%. | 9.36%. |
| Nonprime: 601-660. | 9.83%. | 13.92%. |
| Subprime: 501-600. | 13.18%. | 18.86%. |
2 more rowsSep 5, 2024
Even people with good credit scores make mistakes, and a bank may charge a penalty APR on your credit card without placing a negative mark on your credit report. Penalty APRs typically increase credit card interest rates significantly due to a late, returned or missed payment.
What is the highest legal APR on a car? ›
The law says that lenders cannot charge more than 16 percent interest rate on loans. Unfortunately, some lending companies owned by or affiliated with vehicle makers have devised schemes whereby you are charged interest at rates exceeding the maximum permitted by law. This is called usury.
Which bank has the lowest car loan interest rate? ›
I... Top Banks like Canara Bank, HDFC Bank, ICICI Bank, Punjab National Bank, and State Bank of India are providing the cheapest car loans. Canara Bank interest rates range from 8.80 percent to 11.95 percent. HDFC Bank car loans start from 8.75 percent.
For instance, using our loan calculator, if you buy a $20,000 vehicle at 5% APR for 60 months the monthly payment would be $377.42 and you would pay $2,645.48 in interest.
What is 6% interest on a $30,000 loan? ›
For example, the interest on a $30,000, 36-month loan at 6% is $2,856.
Who has the lowest APR for car loans? ›
Compare the Best Auto Loan Lenders
| Company | Used APR Range |
|---|
| AUTOPAY Best for Bad Credit/Low Rates | As low as 5.69% |
| Consumers Credit Union Best Credit Union | As low as 6.84% |
| LendingTree Best for Refinance | As low as 5.99% (Refinance) |
| LendingClub Best for Fair Credit | 4.99%–24.99% (Refinance) |
3 more rowsSep 6, 2024
If you have fair credit (600-699), the average auto loan rates are 11.40% for a new car and 11.65% for a used car. If you have bad credit (451-599), the average auto loan rates are 16.46% for a new car and 16.71% for a used car. As you can tell, APR varies greatly based on your credit score.
How to lower APR on car loan? ›
How to Lower the APR on a Car Loan
- Be aware of your credit score. Be aware of what your credit score is and if there are any points that need to be corrected before you apply for a car loan.
- Clean up your score. ...
- Consider Refinance Loans. ...
- Enlist a cosigner. ...
- Consider in-house financing.
The auto loan rate forecast for 2024 suggests a cautiously optimistic outlook. While rates are not expected to plummet, there is potential for a modest decline as the year progresses, particularly if inflation continues to subside and the economy remains stable.
Is 10% APR too high for a car? ›
On the other hand, a 10% APR is not good for mortgages, student loans, or auto loans, as it's far higher than what most borrowers should expect to pay.
Is 5% APR on a loan good? ›
A 5% APR is good for pretty much all types of borrowing, except for mortgages. On personal loans, credit cards, student loans, and auto loans, 5% is much cheaper than the average rate.
Is 3.5% APR good? ›
The APR available to you will also depend on your credit. A low credit card APR for someone with excellent credit might be 12%, while a good APR for someone with so-so credit could be in the high teens. If “good” means best available, it will be around 12% for credit card debt and around 3.5% for a 30-year mortgage.
What is a really good APR rate? ›
An APR is considered to be a good rate when it is at or below the national average, which currently sits at 20.40%, according to the Fed. This means that a credit card offering a fixed rate lower than 20.40% or a variable rate with a maximum of 20.40% would be considered a good APR for the average borrower.
