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Avoid unpleasant surprises by finding out your score before you apply.
Then improve your credit, if necessary, to qualify for a low rate.
What Is an Auto Loan Interest Rate?
Lenders consider several factors when calculating the rate for a particular borrower.
Some are things you have no control over, such as federal interest rates.
Your credit score predicts how risky a borrower you are.
The average soared to 15.43% for borrowers with deep subprime, or very poor, credit.
Heres a closer look at averages Experian calculated for each credit score category using the VantageScore 4.0 scoring model.
Income
Lenders look at your monthly income and how much other debt you have.
A higher debt-to-income ratio correlates with higher risk because the borrowers budget is stretched thin.
Having more of their own money invested in the car makes them less likely to default on their loan.
That added risk means a higher rate than you might pay with a 36- or 48-month term.
Not so with a used car.
Increase the rate to 13% and the total interest payment jumps to about $5,480.
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