The interest rates you are offered for auto loans are determined by a number of factors, the most significant of which is your credit score. Understanding typical auto loan interest rates can help you determine whether you would receive a favorable rate on your loan and can also give you an idea of what you might be eligible for.
The MarketWatch Guides team will analyze auto loan interest rates for both new and used cars by state, vehicle type, and credit score in this article. We’ll also go into more detail about how auto loans operate and where to look for the best rates that fit your credit situation.
The MarketWatch Guides Team is dedicated to giving you trustworthy information so you can choose the best financing option for your car. Since customers depend on us to deliver unbiased and precise information, we developed an extensive rating system to create our lists of the top auto loan providers. In order to rank the loan providers according to a variety of criteria, we gathered information on dozens of them. Following 300 hours of investigation, each provider received an overall rating; the top-ranked businesses were those with the highest points.
Average car loan interest rates by credit score
Average interest rates for auto loans are disclosed by consumer credit reporting firm Experian in its quarterly Automotive Finance Market report. The average interest rate on all auto loans in the third quarter of 2023 was 7. 03% for new cars and 11. 35% for used cars.
Based on the VantageScore credit scoring model, Experian also provides average auto loan APRs by credit score.
|
Credit score |
Average APR, new car |
Average APR, used car |
|---|---|---|
|
Superprime: 781-850. |
5.61%. |
7.43%. |
|
Prime: 661-780. |
6.88%. |
9.33%. |
|
Nonprime: 601-660. |
9.29%. |
13.53%. |
|
Subprime: 501-600. |
11.86%. |
18.39%. |
|
Deep subprime: 300-500. |
14.17%. |
21.18%. |
|
Source: Experian Information Solutions. |
||
The best chance of obtaining the lowest interest rates is for those with credit scores above 780; credit scores below 501 usually translate into the highest interest rates.
Are auto loan interest rates rising?
It’s important to remember that auto loan interest rates typically rise in tandem with Federal Reserve increases to the federal funds rate. Interest rates on auto loans have now reached their highest point in years as a result of Fed rate increases that started in 2022. Although the rates are more recent, some sources offer average auto loan interest rates that are updated monthly; however, they are not broken down by credit score.
In January 2024, automotive site Edmunds. according to com, the typical auto loan interest rate in December 2023 will be 7. 1% APR for new car loans and 11. 4% APR for used car loans. The volume-weighted average rate was reported as 9 by data company Cox Automotive. 75% for new cars and 14. 13% for used cars in its 1/23/24 Auto Market Report. Cox Automotive rates are sales-weighted averages derived from data obtained from Dealertrack, a car dealership software.
How to use average car interest rates
Use NerdWallet’s auto loan calculator to enter your credit score, determine your potential qualifying interest rate, and calculate the monthly payment for a variety of loan terms.
Although it’s useful to use averages when calculating auto loan interest rates, you won’t know your exact interest rate until you apply for a loan and get offers from lenders. A number of variables, such as the age of the vehicle and the length of the loan term, may impact your rate.
Check rates and compare offers from several lenders to make sure you’re getting the best deal possible. Pre-qualification with a soft credit check is something that many lenders offer. It allows you to get an idea of the rate you might be eligible for without having an impact on your credit score.
Compare rates from up to four lenders to find the best deal possible—free of fees, markups, or commitments.
You might be able to refinance for a lower rate and a smaller payment if you’ve already financed a car and your rate is higher than the average rate indicated for your credit score. Get an idea of the rates you will be offered by pre-qualifying for a refinance of your auto loan with multiple lenders.
FAQ
What is a good interest rate for a 72-month car loan?
What would be a good interest rate for a car loan that is due in two months? An interest rate that is less than five percent is a great rate for a car loan that is due in two months. But only those borrowers with the best credit scores and payment records qualify for the best loan offers.
What interest rate is good for a car loan?
Generally speaking, a good auto loan interest rate is less than 5. 18% for new cars and 6. 79% for used vehicles. To determine whether you’re getting a good deal, it’s best to look at the average interest rates for the credit score category you fall into as the best rate varies depending on the borrower.
What interest rate can I get with a 800 credit score car loan?
Average Credit Score for Auto Loan Interest Rates: Average Rate for New Cars; Average Rate for Used Cars; Nonprime (620-659)8 86%13. 28%Prime (660-719)6. 40%8. 75%Super prime (720 or above)5. 18%6. 79%.
What is the effective interest rate on a car loan?
Name of the BankInterest Rate (p. a. )Federal Bank of India8. 85% p. a. onwardsTamilnad Mercantile Bank10. 70% p. a. onwardsPunjab National Bank8. 75% p. a. onwardsUnion Bank of India9. 15% p. a. onwards.
Read More :
https://www.nerdwallet.com/article/loans/auto-loans/average-car-loan-interest-rates-by-credit-score
https://www.marketwatch.com/guides/car-loans/auto-loan-interest-rates-by-credit-score/