A good interest rate for a car loan is typically below 5.18% for new cars and 6.79% for used vehicles. However, the best rate is unique to the borrower so it's best to look at the average interest rates for your credit score category to know if you're getting a good deal.
If you can get a rate under 6% for a used car, this is likely to be considered a good APR.
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.
An interest rate under 5% is a great rate for a 72-month auto loan. However, the best loan offers are only available to borrowers who have the best credit scores and payment histories.
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. You can learn more about car loans here.
In early 2023, average rates for new and used vehicles were 6.58 percent and 11.70 percent, respectively, according to Experian. The third quarter brought similar rates, 7.03 percent for new and 11.35 percent for used.
In the third quarter of 2023, the overall average auto loan interest rate was 7.03% for new cars and 11.35% for used cars. Experian also provides average car loan APRs by credit score, based on the VantageScore credit scoring model.
Car prices were high in 2023, and financing rates were expensive. Buying a car in 2023 wasn't good for many people's personal finances.
Deep subprime: 300-500. 14.17%. 21.18%. Source: Experian Information Solutions. Based on Experian data, if you have a 500 credit score, you might see rates on a used car of about 21%, compared with 13% for a credit score of 650.
For most buyers in 2024, new car deals are more sensible due to lower financing costs and attractive incentives. Used car prices are declining but remain high, affected by the pandemic's long-term impact on production.
Auto loan rates for new cars were at their highest in the 1980s, when they hit 17.36% in November of 1981. Over the years, recessions and a global pandemic contributed to the volatility of loan rates. Economic experts don't expect the Fed to lower interest rates until 2024.
Your credit score is crucial to determine your eligibility for a no down payment car loan. Most lenders require a FICO credit score of at least 680 before you can qualify. If your credit score falls below 680, improve your credit score before you apply to help you qualify in the future.
Can you negotiate auto loan rates? Yes. Like you negotiate vehicle prices, you can try to lower your interest rates before signing off. One of the best ways to secure a lower rate is by making a larger down payment or choosing a shorter term.
Key takeaways. Your credit card APR can go up if the prime rate changes, you paid your credit card bill late, your intro APR offer ended or your credit score dropped. If your APR increases, you can work on paying down your balance or transfer your balance to a card with a low or 0 percent intro APR offer.
A credit score of 700 gets you an interest rate of 3% to 6% on car loans for new cars and about 5% to 9% for second-hand cars.
An 800 credit score is not as rare as most people think, considering that roughly 23% of adults have a credit score in the 800-850 range, according to data from FICO. A score in this range allows consumers to access the best credit card offers and loans with the most favorable terms.
Car payment statistics
The average monthly car payment for new cars is $726. The average monthly car payment for used cars is $533. 39.20 percent of vehicles financed in the third quarter of 2023 were new vehicles. 60.80 percent of vehicles financed in the third quarter of 2023 were used vehicles.
How to qualify for a 0% APR car deal. Zero percent financing deals are generally reserved for borrowers with excellent credit — typically classified as a credit score of 800 and above. You'll want to review your credit reports before you start shopping for auto financing.
Not everyone can qualify for an interest-free loan. In fact, lenders or dealerships might review several requirements, including: Credit score: You might need a credit score of at least 740 to be considered for a 0% APR loan.
“One of the Fed's core duties is to keep purchasing power in check, and they do it by raising interest rates,” explains Sarah Foster, senior U.S. economy reporter at Bankrate. To achieve this goal, the Fed increased rates 11 times since March 2022. And lenders have been heeding the message, says Foster.