Since a car that's more than 10 years old is considered high-risk, you're unlikely to find a much lower rate. Even so, you should compare prices to ensure that you continue to receive the. If the current offer is the best, try to avoid a long-term loan. For used vehicles, the average interest rate can range from 3.61% APR with Super Prime to 19.87% with Deep Subprime.
If you can get a rate lower than 6% for a used car, this is likely to be considered a good APR. The actual interest rates you may qualify for vary depending on your credit rating, the term of the loan, the type of vehicle you're financing, and more. After 60 months, your loan is considered riskier and there are even greater peaks in the amount you'll pay for the loan. The average 72-month auto loan rate is nearly 0.3% higher than the typical interest rate for a 36-month new car loan.
This is because there is a correlation between longer loan terms and non-payment. Lenders worry that borrowers with a long-term loan term will ultimately not return their money in full. Over the course of the 60 months, interest rates increase with each year that is added to the loan. Used cars tend to have lower values, as well as a greater chance of being wrecked in an accident and the financial company losing money.
New cars tend to have lower interest rates than used vehicles because those that have been used previously have a greater risk of mechanical failure due to wear and tear. You won't know your real rate until you apply for a car loan and get offers from lenders, but you'll have a general idea of the rate. The higher APR can give the lender an advantage, since it can be difficult to determine the exact value of a used car. Experian data shows that the two most important factors in the interest rate on your auto loan are your credit score and whether you're buying a new or used car.
While there is a direct correlation between a longer repayment period and a higher interest rate with new cars, this is not the case with used cars. It's best to keep your car loan in 60 months or less, not only to save on interest, but also to keep your loan from being worth more than your car, which is also called “being underwater.” Dealerships calculate your interest rate taking into account many factors, such as your credit rating, the type of car you're buying, and where you live. That represents a slight decrease from 4.15% of new car loans and 8.82% of used car loans during the same period of the previous year. If you've already financed a car and your rate is higher than the average rate indicated for your credit score, you may be able to refinance at a lower rate and a lower payment.
If you're looking to get a good APR on a car loan, your results may vary depending on your credit history. The higher your credit score, the lower the interest rate on your car loan, as lenders perceive that you are less likely to default on the loan.
