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average car loan interest rate by credit score

When it comes to getting a car loan, your credit score plays a major role in determining the interest rate you’ll be offered. Lenders use your credit score to assess your risk as a borrower, and those with higher scores are typically seen as less risky and therefore qualify for lower interest rates.

The average car loan interest rate for borrowers with excellent credit (750+ FICO score) is around 3.5%, while those with good credit (670-749 FICO score) can expect to pay around 4.5%. Borrowers with fair credit (620-669 FICO score) will typically pay around 6%, while those with poor credit (580-619 FICO score) will pay around 8%.

If you have bad credit (below 580 FICO score), you may still be able to get a car loan, but you’ll likely have to pay a much higher interest rate, around 12% or more.

Excellent Credit (750+ FICO Score)

If you have excellent credit, you’re in a great position to get a car loan with a low interest rate. Lenders see borrowers with excellent credit as low-risk, so they’re more likely to offer them favorable terms.

The average car loan interest rate for borrowers with excellent credit is around 3.5%. This means that if you borrow $25,000 for a 60-month loan, you could pay around $4,200 in interest over the life of the loan.

To get the best possible interest rate on a car loan, it’s important to shop around and compare offers from multiple lenders. You should also make sure to have a good credit score and a steady income.

Here are some tips for getting a low interest rate on a car loan with excellent credit⁚

Shop around and compare offers from multiple lenders.
Get pre-approved for a loan before you start shopping for a car.
Have a good credit score.
Have a steady income.
Make a large down payment.
Get a shorter loan term.

By following these tips, you can increase your chances of getting a low interest rate on a car loan with excellent credit.

Good Credit (670-749 FICO Score)

If you have good credit, you’re still in a good position to get a car loan with a low interest rate. Lenders see borrowers with good credit as relatively low-risk, so they’re more likely to offer them favorable terms than borrowers with fair or poor credit.

The average car loan interest rate for borrowers with good credit is around 4.5%. This means that if you borrow $25,000 for a 60-month loan, you could pay around $5,400 in interest over the life of the loan.

To get the best possible interest rate on a car loan with good credit, it’s important to shop around and compare offers from multiple lenders. You should also make sure to have a good credit score and a steady income.

Here are some tips for getting a low interest rate on a car loan with good credit⁚

Shop around and compare offers from multiple lenders.
Get pre-approved for a loan before you start shopping for a car.
Have a good credit score.
Have a steady income.
Make a large down payment.
Get a shorter loan term.

By following these tips, you can increase your chances of getting a low interest rate on a car loan with good credit.

Fair Credit (620-669 FICO Score)

If you have fair credit, you may still be able to get a car loan, but you’ll likely have to pay a higher interest rate than borrowers with good or excellent credit. Lenders see borrowers with fair credit as somewhat risky, so they’re more likely to charge them higher interest rates to compensate for the increased risk.

The average car loan interest rate for borrowers with fair credit is around 6%. This means that if you borrow $25,000 for a 60-month loan, you could pay around $7,200 in interest over the life of the loan.

To get the best possible interest rate on a car loan with fair credit, it’s important to shop around and compare offers from multiple lenders. You should also make sure to have a good credit score and a steady income.

Here are some tips for getting a low interest rate on a car loan with fair credit⁚

Shop around and compare offers from multiple lenders.
Get pre-approved for a loan before you start shopping for a car.
Have a good credit score.
Have a steady income.
Make a large down payment.
Get a shorter loan term.
Consider getting a co-signer.

By following these tips, you can increase your chances of getting a low interest rate on a car loan with fair credit.

Poor Credit (580-619 FICO Score)

If you have poor credit, you may still be able to get a car loan, but you’ll likely have to pay a much higher interest rate than borrowers with good or excellent credit. Lenders see borrowers with poor credit as very risky, so they’re more likely to charge them higher interest rates to compensate for the increased risk.

The average car loan interest rate for borrowers with poor credit is around 8%. This means that if you borrow $25,000 for a 60-month loan, you could pay around $9,600 in interest over the life of the loan.

To get the best possible interest rate on a car loan with poor credit, it’s important to shop around and compare offers from multiple lenders. You should also make sure to have a good credit score and a steady income.

Here are some tips for getting a low interest rate on a car loan with poor credit⁚

Shop around and compare offers from multiple lenders.
Get pre-approved for a loan before you start shopping for a car.
Have a good credit score.
Have a steady income.
Make a large down payment.
Get a shorter loan term.
Consider getting a co-signer.

By following these tips, you can increase your chances of getting a low interest rate on a car loan with poor credit.

It’s also important to note that there are some lenders who specialize in making loans to borrowers with poor credit. These lenders typically charge higher interest rates than traditional lenders, but they may be willing to work with you if you have a poor credit score.

Bad Credit (Below 580 FICO Score)

If you have bad credit, getting a car loan can be a challenge. Lenders see borrowers with bad credit as very high risk, so they’re likely to charge them very high interest rates. The average car loan interest rate for borrowers with bad credit is around 12%, but it can be even higher depending on your credit score and other factors.

For example, if you have a credit score below 550, you may have to pay an interest rate of 15% or more. This means that if you borrow $25,000 for a 60-month loan, you could pay around $18,000 in interest over the life of the loan.

To get the best possible interest rate on a car loan with bad credit, it’s important to shop around and compare offers from multiple lenders. You should also make sure to have a steady income and a down payment.

Here are some tips for getting a low interest rate on a car loan with bad credit⁚

Shop around and compare offers from multiple lenders.
Get pre-approved for a loan before you start shopping for a car.
Have a steady income.
Make a large down payment.
Get a shorter loan term.
Consider getting a co-signer.

By following these tips, you can increase your chances of getting a low interest rate on a car loan with bad credit.

It’s also important to note that there are some lenders who specialize in making loans to borrowers with bad credit. These lenders typically charge higher interest rates than traditional lenders, but they may be willing to work with you if you have a bad credit score.

Factors Affecting Interest Rates

In addition to your credit score, there are a number of other factors that can affect the interest rate you’re offered on a car loan. These include⁚

Loan term⁚ The longer the loan term, the higher the interest rate you’ll pay. This is because lenders charge a higher interest rate to compensate for the increased risk of you defaulting on the loan.
Loan amount⁚ The larger the loan amount, the higher the interest rate you’ll pay. This is because lenders charge a higher interest rate to compensate for the increased risk of you not being able to repay the loan.
Vehicle type⁚ The type of vehicle you’re financing can also affect the interest rate you’re offered. For example, lenders typically charge higher interest rates for loans on used cars than they do for loans on new cars.
Your debt-to-income ratio⁚ Your debt-to-income ratio is the percentage of your monthly income that goes towards paying off debt. Lenders use your debt-to-income ratio to assess your ability to repay the loan.
Your employment history⁚ Lenders like to see that you have a stable employment history. If you have a history of job hopping, you may be seen as a higher risk and charged a higher interest rate.