Is 5 percent APR good for a car loan?

Asked by: Ollie Monahan  |  Last update: December 14, 2025
Score: 4.7/5 (13 votes)

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 5% APR on a car loan good?

A 5% APR is very good for auto loans. APRs on auto loans tend to range from around 4% to 10%, depending on whether you buy new or used.

Is 5% a good interest rate?

A high-yield savings account that pays 5% interest is highly competitive. Not only does it significantly outpace the average savings account interest rate, but it's on the high end of the scale even for high-yield savings products.

What is a bad interest rate on a car?

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.

Is 5% interest enough?

A high Annual Percentage Yield (APY) means your money grows faster. With a 5% APY, your savings will increase more quickly compared to lower-rate accounts. For example, if you deposit $10,000, you could earn about $500 in interest over a year. This is much better than accounts with 0.5% or 1% APY.

Car Loans - What's the difference between an Interest Rate & APR?

33 related questions found

What APR is too high for a car?

A high interest rate on a car loan is one that's above the national average. In the second quarter of 2024, the average rate was 6.84% for new cars and 12.01% for used cars, according to Experian's State of the Automotive Finance Market report.

What is an acceptable APR rate?

According to the Service Quality Measurement (SQM) Group , the industry standard for a good FCR rate falls between 70 and 79 percent, which means about 30 percent of tickets take more than one interaction to resolve.

Can you negotiate APR on a car?

Yes, just like the price of the vehicle, the interest rate is negotiable. Dealers might not offer you the lowest rate that you qualify for. To get the best interest rate, shop around with multiple lenders and negotiate.

How much is a $25,000 car loan a month?

Example: A six year fixed-rate loan for a $25,000 new car, with 20% down, requires a $20,000 loan. Based on a simple interest rate of 3.4% and a loan fee of $200, this loan would have 72 monthly payments of $310.54 each and an annual percentage rate (APR) of 3.74%.

Why is a major downside of a 72-month loan?

Because of the high interest rates and risk of going upside down, most experts agree that a 72-month loan isn't an ideal choice. Experts recommend that borrowers take out a shorter loan. And for an optimal interest rate, a loan term fewer than 60 months is a better way to go.

How do I lower my APR on my car?

How to Lower the APR on a Car Loan
  1. 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.
  2. Clean up your score. ...
  3. Consider Refinance Loans. ...
  4. Enlist a cosigner. ...
  5. Consider in-house financing.

What does 5 percent APR mean?

Annual percentage rate (APR) refers to the yearly interest generated by a sum that's charged to borrowers or paid to investors. APR is expressed as a percentage that represents the actual yearly cost of funds over the term of a loan or income earned on an investment.

What interest rate can I get with a 800 credit score car loan?

Individuals with an 800 credit score can secure an average interest rate of 5.25% for new cars and 7.13% for used cars. A high credit score allows borrowers to access favorable interest rates and loan terms, which can lower overall borrowing costs.

How high is too high for an APR?

A high APR for a credit card is one that's above the national average. Currently, the average APR is around 25%, so an APR that exceeds that is considered high.

Does APR matter if I pay on time?

Your credit card's APR will not impact you if you pay your credit card balance in full and never pay interest. However, other costs associated with credit cards, such as annual fees, should still be taken into account.

Is 5% APR on a car bad?

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.

What is the highest legal APR on a car?

There is no set federal maximum, although some states do set caps. According to data from Experian, average rates range from 5.38 percent to 21.57 percent, depending on credit and vehicle type. And these are just averages — individual lenders may charge max rates of 30 percent or more.

Why is my APR so high with excellent credit?

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.

Is 5% considered high-interest?

According to Rachel Sanborn Lawrence, advisory services director and certified financial planner at Ellevest, you should feel OK about taking on purposeful debt that's below 10% APR, and even better if it's below 5% APR.

What is 5% interest on $5000?

Suppose you invest $5,000 in a five-year CD paying 5% per year, with no compounding, and you make no additional contributions along the way. You would earn $250 per year, and your $5,000 would become $6,250.

Is 5% short interest high?

Short interest as a percentage of float below 10% indicates a positive sentiment. Short interest above that is relatively high, suggesting pessimism in the market about the stock. Short interest above 20% is exceptionally high.