With the average used car costing more than $20,000, most buyers have to take out an auto loan to afford the purchase. The interest you have to pay on that loan can add thousands to the overall cost. While there are other costs, such as taxes and insurance, to think about, car loan interest is often the second largest cost you’ll face when buying.
Getting a great deal on your car loan interest rate is an excellent way to save money. We’ll show you the average rates available and some strategies to help you find low rates.
To find the current average used car loan interest rates for each credit tier, we looked at rates from our partner myAutoLoan for consumers with various credit scores across multiple metropolitan areas where myAutoLoan has data. We assumed a loan amount of $16,000, which is the average price of a used car, minus a 20 percent down payment.
The current national average interest rate for a three-year used car loan is 5.33 percent, according to Bankrate.
Average Used Auto Loan Rate for Excellent CreditBorrowers with top-notch credit get the lowest used car financing rates, on average. Consumers with credit scores 750 points or higher are considered to have excellent credit. Lenders see them as being likely to make all of their monthly payments on time and pay off the loan as agreed.
Borrowers in this range shopping for certified used cars may qualify for special financing incentives offered by automakers. You can see these offers on our used car deals page.
Average Used Auto Loan Rate for Good CreditGetting a car loan when your credit is between 650 and 699 can be significantly more expensive than it is for borrowers with better credit scores. In fact, the current average interest rate is more than double what it is for prime and super-prime credit borrowers. Even at 8 percent, however, borrowing rates for buyers with fair credit are currently pretty low when compared to historical standards.
A good strategy if you get one of these loans is to make all of your payments for a year or so, then refinance at a lower rate since you can show a track record of making payments and have built up significant equity in the car. Read our article on refinancing a car to learn more.
