What is a good APR for a car loan? It depends on your credit score.

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  • The interest rate for a car loan will largely depend on your credit score.
  • Those with credit scores between 781 and 850 saw an average interest rate on new cars of 2.4% in the first quarter of 2022.
  • Meanwhile, borrowers with scores in the lower range (300-500) saw average rates of 14.76%.
  • See Insider’s Picks for the Best Auto Loans of 2022 »

When shopping for a car, one of your first considerations is probably how you’re going to pay for it. If a new or used car loan is in your future, it’s worth researching what types of interest rates are available to you.

Your annual percentage rate, or APR, can vary widely. Your


credit score

is the most important determining factor. You will want to check this before starting the process. There are many free tools to check your credit score online. If your score is low, you can pay a little interest. If possible, waiting to buy while you work on improving your credit could save you a lot of money.

What is the average interest rate for a car loan?

The average interest rate for a car loan is very different depending on your credit score. Credit reporting company Experian collects data on auto loan interest rates and calculated averages for new and used vehicle purchases on five credit levels. Here are the average interest rates borrowers in each credit category received in the first quarter of 2022 for new and used car loans.

Average interest rate for a new car loan

Average interest rate for a used car loan

What factors influence car loan interest rates?

The interest rate on your car loan will be determined by several factors:

How to find a car loan with a low APR

The car itself shouldn’t be the only thing you shop for: shop around for your car loan. Get pre-approved from multiple lenders and compare them to find the best deal for you.

Good places to start looking include banks or local


credit unions

where you already have a relationship. There are also a variety of other online lenders and banks that provide auto loans — check out Insider’s list of the best auto loans of 2022 to get started.

Start getting pre-approval offers up to a month before you want to buy. Depending on the lender, these approvals are usually valid for 30 to 60 days. Once you start submitting requests for pre-approval, you have 14 days to submit as many as you want and have them appear as one request on your credit report.

The best way to find a low interest rate on a car loan is to shop around and compare pre-approval offers from several different lenders. If you’re still not impressed with your offers, improving your credit score could be a huge help. You can also reduce the amount you will need to finance by saving more money for a


advance payment

or shorten the term of your loan by paying more per month.

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