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What is a normal interest rate for a car loan?
What is the average car loan interest rate? I’m looking into financing a vehicle and shopping around with different lenders. The thing is, I don't know very much about car loans, so I don't know if the interest rates I’m offered are average rates or higher.
Phoebe Mah · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Good question. A normal car loan interest rate will vary depending on two factors: whether you plan to buy a new or used vehicle and where your credit stands.
The average interest rate for a
new car
is roughly 4.09%, and for a used vehicle
, it is 8.66%. Used automobiles have a higher interest rate because they are a greater risk to insure as older cars are prone to experiencing issues or needing repairs.While it is necessary to consider whether you would like a new or used car, it is equally important to consider where your credit score stands. Your credit score is a crucial factor in determining the interest rate for a loan.
If your credit is between 850 and 660, you’ll have an average or lower interest rate. However, if you have a fair to poor credit score, 660 and under, you will be offered a higher interest rate.
Since you’re shopping around already, you should start to see similar rates among lenders. If you find a very low rate, be sure to review all the terms and conditions before agreeing to anything. Sometimes, a lower interest rate can come with unfavorable terms, depending on your situation.
Apart from shopping around for a car loan, you’ll also want to shop for car insurance with the
Jerry
app. A licensed broker that offers end-to-end support, the Jerry app gathers affordable quotes in seconds, helps you switch plans, and will even cancel your old policy. The average Jerry user saves $879 a year on car insurance.View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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