What Is The Average Interest Rate On A Car Loan?

My clients often ask me, "What is the average interest rate on a car loan?" Well, depending on your credit score, the amount you borrow, location and other factors automobile interest rates will vary significantly. However, I have found that the base interest rates that are offered by banks and other lenders for auto loans tend to be similar across the country (there are some regional variations), because of the way lenders analyze individual credit risks.

Current National Automobile Loan Rates

For the current auto rates you can check with BankRate.com to get an idea of what you will be paying. (You can also check out home mortgage rates on this site). The average interest rate on a 60-month car loan is 5.58 percent and a 48-month new car loan is 5.53 percent.

Good Credit Means Better Interest Rate

If your credit score is above 680 you can usually get a better rate of interest. Your credit score is the most important factor in determining how much you will pay for your auto loan.

The Highest And Lowest Available Auto Rates

Highest: 19 to 28 Percent Interest

If you have poor credit and are considered a sub prime borrower you could pay as high as 19 to 28 percent for your auto loan, depending where you live and how bad your credit is. If you find yourself having to pay a higher rate of interest because of your poor credit, don't get discouraged. This is only temporary. Once you get the loan, make your payments on time and keep your balances low, you can usually re-finance after one or two years for a better rate.


Lowest: Zero-Percent:

Some car dealers, on certain models, are offering a zero-percent interest rate right now. If you choose one of these particular cars be sure and read the fine print in the contract, sometimes the interest rate will increase after two or three years. You don't want any surprises down the road.

Credit Unions

If you belong to a Credit Union check out what rate of interest they are charging on auto loans. In the past Credit Unions have been around 1.5 percent lower than banks. If you don't belong to a Credit Union you may want to join one for the savings. It's easy to sign up. Just stop in and ask to become a member, as long as their membership is open to the public. Some Credit Unions are closed to the general public and their memberships are just for their employees.