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What’s a high APR car loan?
I’m looking to get a car loan. What is a high APR loan and how do I know what a good APR is?
Lauren Smith · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
A high APR (“annual percentage rate”) car loan is one that charges higher-than-average interest rates. The legal limit for car loans is around 16% APR, but you will find lenders that get away with charging rates of 25% or more.
When it comes to car loans, your APR depends on your
credit score
and whether you are trying to get a new or used car
. APR will be higher for a used car than a new car. Since APR represents interest and added fees, you will want the smallest APR possible. If you have good credit (say, between 700-749), an ideal APR is around 5%. If you have bad credit (say, less than 650), your APR could climb to 16% or 20%.
The higher the APR, the more likely you are to fall into debt. If you’re stuck with a high APR loan, you can try to
refinance your vehicle
to get a more favorable rate.And if you ever need to find savings elsewhere,
Jerry
can help you compare dozens of competitive car insurance quotes to save you hundreds a year on your auto 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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