Auto Loan Rates: Used, New, and Refinance
Borrowers with poor credit paid an average annual percentage rate of 14.97% on new auto loans in Q1 2019. That number was 8.08% APR for people with fair credit, 5.12% for prime borrowers, and 4.20% for borrowers with excellent credit.
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According to Experian, 86.1% of new vehicles and 55.16% of used vehicles were financed in the second quarter of 2018. Most people need to use a new car loan to buy a car because vehicles are too expensive to pay cash for up front.
Borrowing money to buy a car is not free. You pay interest on the loan amount to access the funds. This interest is expressed as an annual percentage rate, and you pay that interest over 12 monthly payments each year.
Auto interest rates vary by lender and are also affected by your credit history, the loan amount, the loan term, and other factors. Since lower interest means your vehicle costs less in the long run, shopping around for the most competitive interest rate is an important step in getting an auto loan.
On this page:
- Average Auto Loan Rates
- Auto Loan Rates by Lender
- What Affects Auto Loan Rates
- How to Lower Auto Loan Rates
Average Auto Loan Rates
Car loan rates are not standard — one lender may charge a very different rate than another. Used car rates are different than new car rates, and your own individual financial circumstances will affect your rate as well.
Still, to get an idea of what rate you might pay, you can look at average auto loan rates. Experian has 2019 data on average auto loan rates:
| Credit Rating | Credit Score | New Car APR | Used Car APR |
| Super Prime | 781 – 850 | 4.20% | 4.82% |
| Prime | 661 – 780 | 5.12% | 6.57% |
| Nonprime | 601 – 660 | 8.08% | 11.40% |
| Subprime | 501 – 600 | 12.42% | 17.52% |
| Deep Subprime | 300 – 500 | 14.97% | 20.24% |
>> Read More: Best Auto Loans
As you can see, credit score makes a huge difference, so you should work to improve your credit as much as possible before you start shopping for a car loan.
Auto Loan Rates by Lender
Each lender has its own interest rate ranges which vary based on your credit score among other factors. Here are the current interest rates for some of the most popular lenders in the industry:
| Auto Loan Lender | Rates (APR) |
| LightStream | 3.99% – 17.49%* with AutoPay |
| AutoPay | 1.99% – 17.99% |
| Capital One | 3.59%+ |
| Bank of America | 3.54%+ |
| Navy Federal Credit Union | 2.99% – 17.99% |
| Chase | 4.14% – 24.99% |
What Variables Affect Auto Loan Rates?
The economy can affect auto loan rates, but the three most important factors that determine the rate you’ll pay are your credit score, the lender you choose, and your downpayment amount.
Credit Score
A good credit score tells a lender that you are responsible and likely to submit all of your car payments on time. Since the creditor will see lending to you as less risky, they will not charge you as much interest.
>> Read More: Best Bad Credit Auto Loans
Unfortunately, building a good credit score, takes time. You’ll need to have pre-existing credit — like a credit card — and pay your bills on time every month. You’ll also need to avoid utilizing too much of the credit that is available to you.
Unfortunately, if you haven’t had time to build credit or if your score is too low because of irresponsible past borrowing behavior, this will profoundly impact your auto loan rates.
Lender You Choose
The lender you select will also impact your score. Some lenders charge much more than others, especially if they cater to bad credit borrowers. You should never assume that getting financing through the dealer is always going to be the right way to secure an affordable loan.
Instead, you should get several quotes from different financial institutions, including banks, credit unions, and online lenders, to see who offers lower rates.
By shopping for the most affordable rates, you could potentially save yourself thousands of dollars in interest over the life of your auto loan.
Downpayment
Finally, increasing your downpayment amount may help you obtain lower interest rates. The more you pay for the vehicle upfront, the less risk you pose to the lender, so they’ll be more likely to offer you low rates.
Will I Be Able to Lower My Auto Loan Rate in the Future?
If you can’t qualify for the most favorable loan rates when you obtain a car loan, don’t despair. If you make payments on your loan on time, you should improve your credit score. This can make it possible for you to qualify for an auto refinance loan in the future.
When you refinance, you take a new loan with more favorable terms to repay your old one. You could refinance with the lender who you currently have the loan with, or you could choose a different lender to refinance with.
The key is to refinance only if you can drop your interest rate because your credit score or other financial credentials have improved.
Bottom Line: There’s No Standard Auto Loan Rate – So Shop Around
As you can see, there is no standard rate for an auto loan — but all lenders do consider similar criteria, such as your credit score, income, and downpayment amount, when deciding whether to lend to you and at what interest rate.
To make sure you are getting the best financing possible, you should work to improve your credit before submitting your loan application, you should shop around and compare rates and terms among several different lenders.
By finding the best auto loan rate and keeping borrowing to a minimum, you can keep your monthly payments and total loan costs low so your car will be as affordable as possible.
*Payment example: Monthly payments for a $10,000 loan at 9.34% APR with a term of 3 years would result in 36 monthly payments of $319.58. LightStream disclosures here.