What is a Good Interest Rate for a Car Loan?
You’ve found the perfect car for your Arlington travels, and you’re getting ready to visit the auto financing office, so how do you get the best deal possible? Many Memphis and Bartlett car shoppers ask us, “What is a good interest rate for a car loan?” In truth, the answer varies depending on your credit score and other factors. In this guide, we’ll help you figure out what the average interest rate on a car loan is and what types of financing options you can expect.
Car Financing 101
The auto financing process can seem a little intimidating to many drivers, so at Wolfchase Nissan, we want to make sure that our customers feel total confidence when they purchase a new vehicle. Here are some of the key terms that you might see when you start researching your options:
- Principal: The amount of money that you owe to the lender. This amount does not include things like interest or insurance fees.
- Interest Rate: The rate at which your principal appreciates in value. Higher interest rates mean you’ll pay more over time, while lower interest rates mean you’ll pay less.
- Loan Term: The duration of your car loan, which influences other factors in your financing package. Shorter loan terms like 36 months give you higher payments and lower interest, while a 60-month option will give you lower payments and higher interest.
So What is a Good Car Loan Rate?
Before you start your paperwork, you’ll want to have your credit score handy. You can get one free credit report per year from each of the major credit bureaus: TransUnion, Equifax, and Experian. From there, you can predict your approximate interest rate:
| Credit Score | New-Car Loan APR | Used-Car Loan APR |
|---|---|---|
| 781-850 | 3.17% | 3.8% |
| 661-780 | 4.03% | 5.48% |
| 601-660 | 6.79% | 10.1% |
| 501-600 | 10.98% | 16.27% |
| 300-500 | 13.76% | 19.32% |
So, what is the average interest rate on a car loan? The average interest rate falls between 3% and 4.5% on a three-year car loan, but the answer can change depending on your credit score and the source of your loan. That’s why it’s so important to do your research!
Get Auto Financing Solutions with Wolfchase Nissan
Want to take the next steps? Contact us at Wolfchase Nissan in Bartlett with any questions about the car-buying process, and feel free to apply for financing to prepare for your new car!
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