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It’s useful to know the average auto loan interest rate that other recent car buyers have received when you’re preparing to finance a new or used vehicle. Having this knowledge provides you with a benchmark for comparing loan offers and an idea of what rate to anticipate, particularly for borrowers with credit scores similar to your own.
Your income, credit history, and credit score are just a few of the variables that determine the interest rate you pay on an auto loan. Because lenders use credit scores to determine borrowers’ likelihood of repaying loans, one of the most important factors in determining your rate is your credit score. Generally speaking, the higher your credit score, the lower your car loan interest rate is likely to be.
Car loan interest rates and annual percentage rates, or APRs, arent the same. Interest rate is the percentage you pay to borrow money. APR includes interest rate plus any fees charged by a lender. When comparing loan offers, make sure you are comparing the APR.
Absolutely! A credit score of 750 is considered excellent, putting you in a prime position to secure a favorable car loan interest rate. In fact with a score that high you can expect to qualify for some of the lowest rates available.
But before we delve into the specifics, let’s take a step back and understand how credit scores work in the context of car loans.
Credit Score and Car Loan Interest Rates: A Tightrope Walk
Your credit score is a crucial factor that lenders consider when determining your car loan interest rate. It’s like a financial report card, reflecting your creditworthiness and ability to repay borrowed funds. The higher your score, the less risk you pose to the lender and the more likely you are to receive a competitive interest rate.
The Magic of 750: Unlocking Lower Rates
With a credit score of 750, you’re firmly within the “good” to “excellent” credit range, according to both VantageScore and FICO models. This means you’re eligible for some of the lowest car loan interest rates offered by lenders.
The Numbers Speak Louder: Comparing Rates
Let’s put this into perspective. According to Experian’s Q4 2023 Automotive Finance Market report, the average car loan interest rate for new cars was 5.64% for borrowers with a credit score of 781-850 (superprime). For those with a score of 750, the rate could be slightly higher, but still significantly lower than the average rate for borrowers with lower credit scores.
Beyond the Numbers: Perks of a High Credit Score
A high credit score doesn’t just translate to lower interest rates; it also opens doors to other benefits, such as:
- Larger loan amounts: Lenders are more likely to approve larger loans to borrowers with good credit scores.
- Flexible repayment terms: You may have more options when it comes to choosing a repayment term that suits your budget.
- Additional loan options: You may qualify for special loan programs or discounts offered by lenders to borrowers with excellent credit.
The Takeaway: 750 is Your Ticket to a Great Car Loan Deal
If you’re aiming for the best possible car loan deal, a credit score of 750 puts you in a strong position. With lower interest rates, flexible terms, and potentially larger loan amounts, you can drive away with a car that fits your needs and budget.
Remember:
- Shop around: Compare offers from multiple lenders to ensure you’re getting the best deal.
- Consider your budget: Choose a loan amount and repayment term that you can comfortably afford.
- Read the fine print: Understand the terms and conditions of your loan agreement before signing.
By following these tips and leveraging your excellent credit score, you can secure a car loan that fuels your dreams without burning a hole in your pocket.
Average car loan interest rates by credit score
Consumer credit reporting company Experian releases average auto loan interest rates in its quarterly Automotive Finance Market report. In the fourth quarter of 2023, the overall average auto loan interest rate was 7. 18% for new cars and 11. 93% for used cars.
Experian also provides average car loan APRs by credit score, based on the VantageScore credit scoring model.
|
Credit score |
Average APR, new car |
Average APR, used car |
|---|---|---|
|
Superprime: 781-850. |
5.64%. |
7.66%. |
|
Prime: 661-780. |
7.01%. |
9.73%. |
|
Nonprime: 601-660. |
9.60%. |
14.12%. |
|
Subprime: 501-600. |
12.28%. |
18.89%. |
|
Deep subprime: 300-500. |
14.78%. |
21.55%. |
|
Source: Experian Information Solutions. |
||
The best chance of obtaining the lowest interest rates is for those with credit scores above 780; credit scores below 501 usually translate into the highest interest rates.
» Compare lenders rates to find the best auto loan for you
Are auto loan interest rates rising?
It’s important to remember that auto loan interest rates typically rise in tandem with Federal Reserve increases to the federal funds rate. Interest rates on auto loans have now reached their highest point in years as a result of Fed rate increases that started in 2022. Although the rates are more recent, some sources offer average auto loan interest rates that are updated monthly; however, they are not broken down by credit score.
In March 2024, automotive site Edmunds. com listed the average car loan interest rate for February 2024 as 7. 1% APR for new car loans and 11. 6% APR for used car loans. Data company Cox Automotive gave the volume-weighted average rate as 9. 59% for new cars and 14. 18% for used cars in its 4/2/24 Auto Market Report. Cox Automotive rates are sales-weighted averages based on information from Dealertrack, a software used by auto dealerships.
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FAQ
What car loan rate can I get with a 750 credit score?
|
Credit score
|
Average APR, new car
|
Average APR, used car
|
|
Superprime: 781-850.
|
5.64%.
|
7.66%.
|
|
Prime: 661-780.
|
7.01%.
|
9.73%.
|
|
Nonprime: 601-660.
|
9.60%.
|
14.12%.
|
|
Subprime: 501-600.
|
12.28%.
|
18.89%.
|
Is a 750 credit score good enough to buy a car?
What credit score is needed for best auto loan rates?
What can you get approved for with a 750 credit score?