The better your credit, the lower your rate. When you have a lower rate, you won't have to pay back as much interest to the lender. To get a good base on your APR, we'll start with the average rate of an auto loan based on certain credit rating ranges. Vehicle buyers with an excellent credit score ranging from 780 to 850 were able to obtain new vehicle loans at an average rate of 2.47%.
By contrast, shoppers with lower credit scores, from 300 to 500, earned average rates of 12.53%, according to Experian. This is the breakdown of interest rates based on credit ratings for the purchase of new and used vehicles. Car dealers can provide quick and easy financing for all types of buyers through the partnerships they have with auto finance companies. If your credit score translates to a higher APR for an auto loan, consider establishing a history of paying your bills on time and reducing some or all of your outstanding debts.
Longer car loan terms are generally not allowed on older models for fear that the car won't make it to the end of the repayment schedule. All car loans have an APR, which is the annual cost charged by the lender to borrow money. Even with a strong credit score and a certain type of car, you'll want to compare prices to get your car loan. Jack Ferry began his career as a newspaper reporter before moving to Detroit and working in the automotive industry for more than 25 years in various corporate relations positions with the media.
If you're planning to apply for a new or used car loan, it's worth researching what types of interest rates are available to you.