Average Car Loan Interest Rates by Credit Score (2022) (2023)

The current average car loan interest rate for new cars is 4.07% and 8.67% for used cars according to Experian.

By: Aidan Pounder

08/15/2022 10:58 am

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In 2022, new car loan rates range from 2.40% to 14.76% while used car loan rates range from 3.71% to 20.99%. The difference between a low and high annual percentage rate (APR) is based largely on your credit score.

This article will explain the factors that determine how lenders set APRs and offer tips for finding the lowest auto loan rates. Also read our review of the best auto loan providers to learn about and compare the top lenders in the industry.

Lending Partner

Loan Term

Min. APR

Min. Credit Score

Highlights

Refinance Loan

Average Car Loan Interest Rates by Credit Score (2022) (1)

Loan TermUp to 72Months

Min. APR2.94%

Min. Credit Score580

Highlights

  • Excellent customer ratings
  • Low rates for good credit customers
  • Strong industry reputation

Used Car Loan

Average Car Loan Interest Rates by Credit Score (2022) (2)

Loan Term24-84Months

Min. APR2.24%

Min. Credit Score575

Highlights

  • Below-average credit scores accepted
  • Great interest rates
  • Smooth and easy online experience

Refinance Loan

Average Car Loan Interest Rates by Credit Score (2022) (3)

Loan Term48-84Months

Min. APR1.99%

Min. Credit Score550

Highlights

  • Average monthly savings of $150
  • Work with a personal loan concierge to compare options
  • A+ BBB Rating

Refinance Loan

(Video) What Car Loan Interest Rate Should You Pay in 2021? (Best, Worst, Average Explained)

Average Car Loan Interest Rates by Credit Score (2022) (4)

Loan Term36-72Months

Min. APR2.91%

Min. Credit Score640

Highlights

  • Apply online in minutes
  • A leading provider in refinance loans
  • A+ BBB rating

Refinance Loan

Average Car Loan Interest Rates by Credit Score (2022) (6)

Loan Term24-84Months

Min. APR1.99%

Min. Credit Score575

Highlights

  • Below-average credit scores accepted
  • Great interest rates
  • Smooth and easy online experience

New Car Loan

Average Car Loan Interest Rates by Credit Score (2022) (7)

Loan Term24-84Months

Min. APR2.24%

Min. Credit Score575

Highlights

  • Below-average credit scores accepted
  • Great interest rates
  • Smooth and easy online experience

Refinance Loan

Average Car Loan Interest Rates by Credit Score (2022) (8)

Loan Term36-84Months

Min. APR1.99%

Min. Credit Score560

Highlights

  • Average monthly savings of $145
  • Online Application
  • Browse loan options found specifically for you

Refinance Loan

Average Car Loan Interest Rates by Credit Score (2022) (9)

Loan TermUp to 72Months

Min. APRVaries

Min. Credit Score500

Highlights

  • Great for customers with limited/no credit
  • Offers special military rates
  • A+ BBB rating

Refinance Loan

Average Car Loan Interest Rates by Credit Score (2022) (10)

Loan TermUp to 84Months

Min. APR2.49%

Min. Credit Score500

Highlights

  • Specializes in auto refinancing
  • A+ BBB Rating
  • No application fee

(Video) WHAT WILL A 700 CREDIT SCORE DO FOR LOANS || CAR LOANS AND INTEREST RATES

All APR figures last updated on 6/13/2022 - please check partner site for latest details. Rate may vary based on credit score, credit history and loan term.

What Determines Average Car Loan Interest Rates?

The most important factor that decides your car loan interest rates is your credit score. The better your score, the lower your APR will be. The best rates are reserved for those with credit scores above 800, but according to Equifax, any score above 670 makes you a “low-risk borrower” and opens the door to lower average auto loan rates.

To give you an idea of what average auto loan rates you can expect based on your credit score, see the table below. These outline average auto loan rates for new and used cars based on information from the second quarter 2022 Experian State of the Auto Finance Market report.

Average Car Loan Interest Rates By Credit Score

Credit ScoreAverage New Car APRAverage Used Car APR
781 to 8502.40%3.71%
661 to 7803.56%5.58%
601 to 6606.70%10.48%
501 to 60010.87%17.29%
300 to 50014.76%20.99%

You can see that rates change drastically by credit score. This also affects what you pay back to a large degree. Let’s say you took out a $10,000 auto loan with 60-month terms to purchase a new vehicle. If you have excellent credit and get a rate of 2.40 percent, you would pay an extra $622 in interest. In other words, it costs $606 to take out a loan of $10,000 with that interest rate.

Now, let’s say you have a decent score of 650 and get a rate of 6.70 percent. In this case, you would pay an extra $1,796 in interest on top of the loan.

If a fair score gives you an average auto loan rate of 10.87 percent, you’d pay $3,007 in interest. And if you had a very high rate of 14.76 percent, you’d pay $4,170 in interest on the $10,000 loan. Ouch.

However, your credit score isn’t the only determining factor. Employment status, income, and the type of vehicle you purchase also affect rates. Having a steady income stream and purchasing a newer vehicle will result in better auto loan rate offers.

What Is A Good Auto Loan Interest Rate?

Anything below four percent is an excellent auto loan interest rate. However, depending on your circumstances and credit score, finding a rate below four percent may not be possible.

Credit Score And Car Loan Interest Rates Explained

Your credit score sums up your credit history as a number. To lenders, your score predicts the likelihood that you’ll make on-time payments. People with lower credit scores end up paying higher interest rates because lenders see them posing a higher risk of late payments or default.

On the other hand, people with good credit scores find lower interest rates because lenders see them as good candidates for paying back loans. Life happens, and you may have a low score because of something that happened in the past on your credit report. Unfortunately, the lowest rates are only available to people with the best scores.

Here’s how Experian ranks credit score ranges:

  • Super prime: 781 to 850
  • Prime: 661 to 780
  • Nonprime: 601 to 660
  • Subprime: 501 to 600
  • Deep subprime: 300 to 500

Tips For Reducing Average Car Loan Rates

The best way to reduce the average auto loan rates you find is to improve your credit score. This can be done by paying your bills on time and keeping your credit card balances low. Paying your monthly payments in full can also help. Outstanding debts or collection notices can impact your credit score, so paying these off will improve your credit.

However, building your credit score can take time and the advice above may not be practical for everyone, especially those with a limited income struggling to pay minimum balances each month.

There are a few other things that can reduce your auto loan rates:

  • Have someone cosign: Many lenders allow you to have another person cosign a loan. A cosigner with strong credit can reduce your interest rates.
  • Buy a new car instead of a used one: While new cars are more expensive, lenders typically offer lower auto loan rates for new car purchases.
  • Place a bigger down payment: A bigger down payment can reduce your interest rate as well as the amount of time it takes to pay off your loan.

You might also consider trying to pay your loan in a shorter time frame. While this may not reduce your loan interest rate, it will mean that you pay off your loan sooner and will have to pay less interest. However, be sure to read your loan contract language carefully. Some lenders charge a prepayment penalty – an extra fee for paying down your auto loan too early.

Where To Find The Lowest Auto Loan Rates

The table below shows the lenders that offer the lowest auto loan rates. However, just because a loan provider offers low APRs does not mean everyone is eligible for that rate. Loan terms vary by individual, and there is no single best lender for all drivers.

Some lenders, like PenFed, offer car buying services. This means you can shop for a car and finance it in one place. Also, some lenders offer both purchase and refinancing loans, while others will offer either one or the other.

Best Auto Loan Rates

LenderLowest Auto Loan RateMinimum Credit ScoreLoan Amount
PenFed Credit Union0.99%610$500 to $100,000
Autopay1.99%630$2,500 to $1,000
Auto Approve2.25%580$5,000 to $85,000
RateGenius2.39%550$10,000 to $90,000
myAutoloan.com2.49%575$5,000+
Tresl2.49%500$5,000 to $100,000
Auto Credit ExpressVaries by lenderNo minimum creditVaries by lender

Drivers with poor credit are unlikely to be eligible for the interest rates noted in the table above. If you have poor credit, try comparing offers from multiple lenders using a site such as AutoCreditExpress.com. This site also specializes in finding loans for borrowers with bad credit, so if you have trouble finding auto loan offers, it’s worth checking.

When comparing loans, be sure to only submit applications to auto lenders that allow you to prequalify without a hard credit check. Hard credit checks can hurt your credit score even further. A good first step is to use an auto loan calculator to predict what your payment and total loan cost would be.

How To Apply For An Auto Loan

You can apply for an auto loan online, at a financial institution, or at the dealership when purchasing a car. Some lenders allow you to browse the inventory of participating dealerships after your loan is preapproved. Because most loan applications require vehicle information, you may need to have a particular car in mind before applying.

When you apply for a car loan, be sure to have the following information handy, as it may be required to prequalify and will certainly be required before you submit your formal loan application:

  • Personal details such as name, address, and age
  • Social security number
  • Gross annual income information
  • Vehicle information such as age, mileage, and vehicle identification number (VIN)

While not required during prequalification, before you can secure your loan, you may need additional documentation such as your driver’s license, pay stubs, and personal references.

If you plan to have someone cosign your loan, that person will also need to supply the information and documents mentioned above.

Average Interest Rate For Car Loan: Conclusion

Average interest rates for car loans are determined by a variety of factors, the most impactful thing being your credit score. Depending on your credit score and if you are buying a used or new car, auto loan rates can vary. Before financing a car, we recommend that you look at all of the providers available so you can get the best rates possible.

(Video) HOW TO QUALIFY FOR THE BEST AUTO LOAN RATES @ CAR DEALERS CREDIT TIPS: The Homework Guy

Lending Partner

Loan Term

Min. APR

Min. Credit Score

Highlights

Refinance Loan

Average Car Loan Interest Rates by Credit Score (2022) (11)

Loan TermUp to 72Months

Min. APR2.94%

Min. Credit Score580

Highlights

  • Excellent customer ratings
  • Low rates for good credit customers
  • Strong industry reputation

Used Car Loan

Average Car Loan Interest Rates by Credit Score (2022) (12)

Loan Term24-84Months

Min. APR2.24%

Min. Credit Score575

Highlights

  • Below-average credit scores accepted
  • Great interest rates
  • Smooth and easy online experience

Refinance Loan

Average Car Loan Interest Rates by Credit Score (2022) (13)

Loan Term48-84Months

Min. APR1.99%

Min. Credit Score550

Highlights

  • Average monthly savings of $150
  • Work with a personal loan concierge to compare options
  • A+ BBB Rating

Used Car Loan

Average Car Loan Interest Rates by Credit Score (2022) (15)

Loan TermUp to 72Months

Min. APRVaries

Min. Credit Score500

Highlights

  • Great for customers with limited/no credit
  • Offers special military rates
  • A+ BBB rating
(Video) HOW CREDIT AFFECT YOUR CAR LOAN/ INTEREST RATE ETC...

Refinance Loan

Average Car Loan Interest Rates by Credit Score (2022) (16)

Loan Term24-84Months

Min. APR1.99%

Min. Credit Score575

Highlights

  • Below-average credit scores accepted
  • Great interest rates
  • Smooth and easy online experience

New Car Loan

Average Car Loan Interest Rates by Credit Score (2022) (17)

Loan Term24-84Months

Min. APR2.24%

Min. Credit Score575

Highlights

  • Below-average credit scores accepted
  • Great interest rates
  • Smooth and easy online experience

Refinance Loan

Average Car Loan Interest Rates by Credit Score (2022) (18)

Loan Term36-84Months

Min. APR1.99%

Min. Credit Score560

Highlights

  • Average monthly savings of $145
  • Online Application
  • Browse loan options found specifically for you

Refinance Loan

Average Car Loan Interest Rates by Credit Score (2022) (19)

Loan TermUp to 72Months

Min. APRVaries

Min. Credit Score500

Highlights

  • Great for customers with limited/no credit
  • Offers special military rates
  • A+ BBB rating

Refinance Loan

Average Car Loan Interest Rates by Credit Score (2022) (20)

Loan TermUp to 84Months

Min. APR2.49%

Min. Credit Score500

Highlights

  • Specializes in auto refinancing
  • A+ BBB Rating
  • No application fee

All APR figures last updated on 6/13/2022 - please check partner site for latest details. Rate may vary based on credit score, credit history and loan term.

Average Car Loan Rate: FAQ

Below are a few frequently asked questions and answers regarding average interest rates for car loans:

FAQs

Which FICO score do auto lenders use 2022? ›

Most auto lenders use FICO Auto Score 8, as the most widespread, or FICO Auto Score 9. It's the most recent and used by all three bureaus. FICO Auto Score ranges from 250 to 900, meaning your FICO score will differ from your FICO Auto Score.

What car APR can I get with 700 credit score? ›

A 700 credit score puts you firmly in the prime range of credit scores, meaning you can get a competitive rate as long as you shop around, have good income, and have a solid debt-to-income ratio. A 700 credit score gets an average car loan interest rate of 3% to 6% for new cars and 5% to 9% for used cars.

What is a realistic interest rate on a car loan? ›

The average auto loan rate is 4.33% for new cars and 8.62% for used cars, but shop around to get the best deal.

What is a good interest rate for a 72 month car loan? ›

The average 72-month auto loan rate is almost 0.3% higher than the typical 36-month loan's interest rate for new cars.
...
Loans under 60 months have lower interest rates for new cars.
Loan termAverage interest rate
60-month used car loan4.17% APR
72-month used car loan4.07% APR
2 more rows

Is 670 a good credit score to buy a car? ›

With a score of 670 to 679, you are in the second-best credit score range for auto loans and you will pay relatively low interest rates. If your score is between 670 and 679, you'll have to be careful about your credit if you're considering applying for a car loan.

What is a good FICO score to buy a car? ›

In general, lenders look for borrowers in the prime range or better, so you will need a score of 661 or higher to qualify for most conventional car loans.

Do car dealerships look at Equifax or TransUnion? ›

While Experian and Equifax are the most popular bureaus among auto lenders and car dealers, TransUnion can also be used for auto loan decisions. And the truth is, the credit bureau lenders use when evaluating your auto loan application probably will not influence their decision too much.

What does a FICO score of 8 mean? ›

FICO 8 scores range between 300 and 850. A FICO score of at least 700 is considered a good score. There are also industry-specific versions of credit scores that businesses use. For example, the FICO Bankcard Score 8 is the most widely used score when you apply for a new credit card or a credit-limit increase.

Can I buy a car with a 657 credit score? ›

There is no set credit score you need to get an auto loan. If you have a credit score above 660, you will likely qualify for an auto loan at a rate below 10% APR. If you have bad credit or no credit, you could still qualify for a car loan, but you should expect to pay more.

How big of a loan can I get with a 700 credit score? ›

You can borrow $50,000 - $100,000+ with a 700 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.

Can I get a car loan with a 702 credit score? ›

A 702 FICO® Score is considered “Good”. Mortgage, auto, and personal loans are relatively easy to get with a 702 Credit Score. Lenders like to do business with borrowers that have Good credit because it's less risky.

Do you save on interest if you pay off a car loan early? ›

Save money

The most obvious reason you might want to consider paying off a loan early is that it saves you money on the amount of interest you pay. It's important to note that this only applies if you are paying a simple and not precomputed interest rate.

What auto interest rate can I get with a 650 credit score? ›

Interest rates for new car auto loans

Credit Score of 601–660 (Nonprime): 7.14% Credit Score of 501–600 (Subprime): 11.33% Credit Score of 300–500 (Deep Subprime): 13.97%

Is it better to get an auto loan from your bank or the dealership? ›

The primary benefit of going directly to your bank or credit union is that you will likely receive lower interest rates. Dealers tend to have higher interest rates, so financing through a bank or credit union can offer much more competitive rates.

Is it smart to do a 72 month car 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. You can learn more about car loans here.

How can I get a lower interest rate on my car loan? ›

How to Lower Your Car Loan Interest Rate
  1. Maintain a good credit score. ...
  2. Apply for Auto refinancing. ...
  3. Shop around and Compare Auto refinance rates. ...
  4. Apply with a co-borrower or add a co-signer. ...
  5. Negotiate the APR with the lender. ...
  6. Think about shorter loan terms.

Which bank has the lowest interest rate for auto? ›

Auto Loan Providers With the Best Rates
LenderStarting APRAward
1. myAutoloan3.99%Best Low-Rate Option
2. Consumer Credit Union4.09%Most Flexible Terms
3. AutoPay2.99%Most Well-Rounded
4. PenFed Credit Union4.44%Most Cohesive Process
1 more row
1 Sept 2022

How do you get a 800 credit score? ›

How to Get an 800 Credit Score
  1. Pay Your Bills on Time, Every Time. Perhaps the best way to show lenders you're a responsible borrower is to pay your bills on time. ...
  2. Keep Your Credit Card Balances Low. ...
  3. Be Mindful of Your Credit History. ...
  4. Improve Your Credit Mix. ...
  5. Review Your Credit Reports.
12 Mar 2022

How fast will a car loan raise my credit score? ›

When you make a timely payment to your auto loan each month, you'll see a boost in your score at key milestones like six months, one year, and eighteen months. Making your payments on time does the extra chore of paying down your installment debt as well.

What can a 700 credit score do? ›

What a 700 credit score can get you. Your credit score is used by lenders to see if you qualify for financial products and to set the interest rate you'll pay. With a 700 credit score, you've crossed over into the "good" credit range, where you can get cheaper rates on financial products like loans and credit cards.

What credit score is needed for a 2022 car? ›

In general, you'll need a credit score of at least 600 to qualify for a traditional auto loan, but the minimum credit score required to finance a car loan varies by lender. If your credit score falls into the subprime category, you may need to look for a bad credit car loan.

Which credit bureau is used most for auto loans? ›

Equifax and Experian are the most commonly used credit bureaus by auto lenders. They offer services that are directed specifically at the auto industry, and each gets a portion of their revenue from the industry.

What credit score is needed to buy a car with no down payment? ›

What Credit Score Do I Need to Buy a Car? Generally speaking, banks require a minimum credit score of 600 to give an auto loan without any down payment. However, you CAN buy a car with a score of 400 or a score of 850.

Which credit bureau is most accurate? ›

Although Experian is the largest credit bureau in the U.S., TransUnion and Equifax are widely considered to be just as accurate and important. When it comes to credit scores, however, there is a clear winner: FICO® Score is used in 90% of lending decisions.

What credit score is used most? ›

What Is FICO 8? FICO 8 is still the most widely used FICO credit score today. If you apply for a credit card or personal loan, odds are that the lender will check your FICO 8 scores from one or more of the major credit bureaus.

Which one is more important TransUnion or Equifax? ›

Is TransUnion more important than Equifax? The short answer is no. Both TransUnion and Equifax are reliable credit reporting agencies that compile reports and calculate your credit scores using different scoring models.

How do you get a 900 credit score? ›

7 ways to achieve a perfect credit score
  1. Maintain a consistent payment history. ...
  2. Monitor your credit score regularly. ...
  3. Keep old accounts open and use them sporadically. ...
  4. Report your on-time rent and utility payments. ...
  5. Increase your credit limit when possible. ...
  6. Avoid maxing out your credit cards. ...
  7. Balance your credit utilization.
30 Sept 2021

Is Credit Karma or Experian more accurate? ›

Experian vs. Credit Karma: Which is more accurate for your credit scores? You may be surprised to know that the simple answer is that both are accurate. Read on to find out what's different between the two companies, how they get your credit scores, and why you have more than one credit score to begin with.

What Experian score is very 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.

Is 4.9 APR good for a car loan? ›

As of January 2020, U.S. News reports the following statistics for average auto loan rates: Excellent (750 - 850): 4.93 percent for new, 5.18 percent for used, 4.36 percent for refinancing. Good (700 - 749): 5.06 percent for new, 5.31 percent for used, 5.06 percent for refinancing.

Is 5 interest rate high for 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.

Is it worth getting finance for a car? ›

Is financing a car worth it? Financing a car is worth it if you can get a rate below four percent for a new car or seven percent for a used car. Paying the car off in three or four years instead of five or six years is also better in the long run.

What is the car loan interest rate in UK? ›

The minimum APR is 3.4%, and the maximum APR is 29.9%. The rate for your loan will depend on the amount you want to borrow and the repayment term you choose. You can get an idea of the rates and charges before taking out a loan by using our loan calculator.

Can you negotiate APR on 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.

Is a 4.25 interest rate good for a car? ›

Generally speaking, if your credit score is 700 or less, 4.5% APR is considered good. In fact, it's close to average for a standard car loan. If your credit score is above 750, you can likely find lower interest rates in the 2% to 3% range. The lower the interest rate, the better it is for you and your wallet.

How can I lower my APR on my car loan? ›

How to lower APR on a car loan
  1. Check your credit reports and build credit. ...
  2. Apply for refinancing. ...
  3. Apply with a co-borrower or add a cosigner. ...
  4. Shop around. ...
  5. Think about shorter loan terms. ...
  6. Negotiate APR and interest rate.
16 Nov 2018

What is the average interest rate on a car loan with a 750 credit score? ›

The average rate for a used car loan in the 750 to 759 credit score range is 5.53% (33.33% higher than the average rate for a new car).

Do Dealers prefer cash or financing? ›

Although some dealerships give better deals to those paying with cash, many of them prefer you to get a loan through their finance department. According to Jalopnik, this is because dealerships actually make money off of the interest of the loan they provide for you.

Is it better to get an auto loan from your bank or the dealership? ›

The primary benefit of going directly to your bank or credit union is that you will likely receive lower interest rates. Dealers tend to have higher interest rates, so financing through a bank or credit union can offer much more competitive rates.

How can I finance a car smartly? ›

How to Get a Car Loan
  1. Check your credit report.
  2. Apply for auto loans from multiple lenders.
  3. Get preapproved for an auto loan.
  4. Use your loan offer to set your budget.
  5. Find your car.
  6. Review the dealer's loan offer.
  7. Choose and finalize your loan.
  8. Make payments on time.
6 Jun 2022

How do banks decide on car loans? ›

The amount you can borrow for a car is based on your monthly income and expenses, your credit score and your debt load. Your down payment will also affect how much you can afford.

Do you pay more interest at the beginning of a car loan? ›

However, simple interest does not mean that every time you make a payment on your loan that you pay equal amounts of interest and principal. Instead, car loans are paid down via amortization, meaning you pay more interest at the beginning of your car loan than at the end.

How much is a car payment for a 25 000 car? ›

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%.

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