Best Auto Loan Rates By Credit Score

By Mark Huntley, J.D.

Real estate investor, lawyer, personal finance writer, and Co-Founder of Credit Knocks

Advertiser Disclaimer - Some links on this page may pay us advertising fees.

Summary: These are the best auto loan rates you can expect based on which of the five auto loan credit score categories that you fall into. 

Cars are more expensive today than ever before. In fact, the average amount financed is about $27,435 for a new car and $18,792 for a used car.

So if you’re in the market for a new (or used) car, it’s essential to look for the best rate, regardless of your credit.

A good interest rate can save you hundreds or even thousands on the overall cost of your loan.

But how do you get the best auto loan interest rate? Keep reading to find out. 

Disclaimer: "Credit score" refers to FICO score in this article.  If you have a different score (i.e. VantageScore), that does not likely equal your FICO.  For example, a 728 VantageScore could equal any FICO score... 692, 748, 809?  Who knows?  You can get your FICO score here.

What is the Interest Rate on a Car Loan?

Essentially, the interest rate on your car loan is the amount you pay to borrow money.

When you buy a car, you’ll likely see your interest rate listed in two different ways: A base interest rate without any loan fees and an annual percentage rate (APR), which shows how much you’ll pay each year to borrow money, including interest and fees. 

The higher your APR is, the more money you’ll have to dish out until you pay off your car loan in full.

A higher APR may also translate into a higher payment and increase your monthly expenses.

This can be a major issue, especially if you already have to pay a lot for your mortgage, rent, utilities, student loans, and various other bills. 

When you compare auto loan interest rates, make sure you look at APR to APR as these numbers indicate the total cost of financing.

This will ensure you’re comparing apples to apples and can increase your chances of scoring the best deal on your auto loan. 

Factors That Affect Your Interest Rate 

There a number of factors that will influence your auto loan interest rate including:

  • Credit Score: The higher your credit score is, the lower your auto interest rate will likely be because lenders will consider you a responsible borrower. 

  • Loan Term: If you get a loan with a longer term, you can expect a higher interest rate. A higher rate can give your lender more money through interest and reduce their risk of lending you money.

  • Down Payment: A small down payment or no down payment will come with a higher interest rate because your lender will be taking on more risk. So you may want to save up some cash and come up with a substantial down payment. 

  • Whether Your Car is New or Used: Since they have a lower resale value than new cars, lenders typically charge higher interest rates for used cars. This doesn’t mean you should automatically buy a new car instead. A used car can still save you a lot of money on your vehicle expenses.

  • Your Lender: There are plenty of auto lenders out there. You can get a car loan from a bank, credit union, dealership, or online lender. Not all lenders offer the same auto loan interest rates so it’s wise to shop around and check out all your options.

What is the Average New Car Loan Interest Rate?

According to Experian’s State of Automotive Finance Market report, the average auto rate for a new car loan is 5.76%.

Of course, this is just the average so you can’t expect a lender to give you this exact rate.

If you have an excellent or good credit score, your interest rate may be a bit lower. On the other hand, if you have less than stellar credit, it may be higher. 

Quick Note:

Do not apply for a refinance car loan if your credit score is below 600.  

What is the Average Used Car Loan Interest Rate?

Experian’s State of Automotive Finance Market report also found that for a used car loan, the average auto loan interest rate is 9.49%.

Don’t forget that this number is higher than the average new car loan interest rate because the resale of your car will be lower so you’re automatically a riskier borrower in a lender’s eyes. 

Average Car Loan Interest Rate By Credit Score

Whether you live in California or Texas, we have found the best online auto loans by state for you. 

If you want to get the best possible car loan rates in your state...

Simply click on the state that you live in below and  fill out a quick, free, no-obligation application to start driving your new car! 

How to Improve Your Credit and Get a Good Auto Loan Interest Rate

If you don’t have the best credit, it’s definitely worth your time and effort to improve your credit.

By doing so, you can save a boatload of cash on your car loan.

So unless you’d rather use more of your hard-earned money on interest, take these steps to improve it. 

  • Pay Your Bills On Time: Your credit score will take a hit, even if you miss one payment on your credit card, rent, mortgage, utilities, or other bills. Set up calendar reminders or sign up for automatic payments so you never miss a payment. 

  • Keep Your Balances Low: Try to keep your credit balances as low as possible. In a perfect world, they’d be no more than 30% of the credit available to you. If you have a credit card with a limit of $3,000, for example, don’t let your balance get above $1,000. 

  • Lower Debts and Increase Income: The less money you owe, the easier it’ll be for you to make your payments on time and borrow less money. Get rid of any unnecessary expenses and consider a side hustle to help you reduce your debt burden and boost your income. Cutting that gym membership you never use or driving for Uber for a few hours a week can be the keys to boosting your credit. 

  • Only Apply for New Credit When You Need It: Every time you apply for new credit, a hard inquiry will show up on your credit report. Since too many hard inquiries can ding your credit score, only apply for new credit if you really need it.

  • Check for Credit Report Errors: Go to to get free copies of your credit reports from the three major bureaus: TransUnion, Equifax, and Experian. Once you do, look at them very closely as you may come across an error or inaccuracy that’s caused your credit to be lower than it should be. If you do, contact the bureau immediately to dispute it.

Why Use an Online Lender

When you begin to shop for an auto loan, you’ll find that not all lenders are created. In fact, there may be a big difference between the rate you get from two different lenders. While you can go to a bank, credit union, or dealership to get a car loan, your best bet will probably be an online lender. Here’s why.

  • Best Interest Rates: There are plenty of online lenders that are known to offer lower auto loan interest rates than banks and other traditional lenders, especially if you have a decent credit score. With good credit, you may be able to land an interest rate that’s two percentage points lower than what you would get from a bank. This may not seem like a big difference but it can actually save you thousands of dollars on your entire loan.

  • Speed and Convenience: Let’s be honest. You lead a busy life and don’t have hours upon hours to get a car loan. With an online lender, you can apply for a loan quickly while you’re hanging out at home on your couch. There’s no need to drive to a bank, meet with a customer service representative, and fill out pages upon pages of paperwork. 

  • Ability to Pre-Qualify: Depending on the lender you choose, you may be able to get prequalified in minutes. If you do, you’ll find out the interest rate, loan term, and loan amount you may be approved for. This can make comparing loan offers a breeze. Luckily, prequalification is usually a soft inquiry that won’t hurt your credit. 

  • Great Option for Bad Credit: If you don’t have the best credit, don’t be surprised if a bank turns you away for a car loan as they usually have strict requirements for their borrowers. An online lender is likely to be more lenient and consider you even if you don't have good or excellent credit. 

Before you go with an online lender, take the time to read some reviews about them.

Look at their Better Business Bureau (BBB) page and make sure they’re a legitimate company with many satisfied customers.

You don’t want to commit to a loan from an online lender and later find out they have terrible customer service or charge hidden fees.

Do the heavy lifting beforehand and you’ll save yourself a great deal of headaches down the road. 

Say No to Dealership Financing 

Whatever you do, stay away from dealership financing. When we say it’s the worst possible way to finance your car, we mean it.

Since dealers who offer financing act as middle men, they will jack up the interest rate so that they can keep a commission and get paid for helping you with financing.

After all, nobody wants to work for free. Unfortunately, this commission can raise your monthly payment substantially. 

Dealers are also notorious for pressuring their customers to make financing decisions on the spot.

So they may try to get you to agree to their interest rate and financing offer right away so you don’t even think about shopping around or trying to find something better.

Don’t fall for this type of pressure. 

“Having the entire car-buying process neatly bundled into one transaction...makes purchasing easy. However, it’s a horrible way to buy a car if you want to get a good deal. It’s a common dealer trick to keep you focused solely on the monthly payment while they manipulate the trade-in value, vehicle price, and car loan terms. In most cases, they make a significant portion of their profit on the sale by marking up the cost of the car loans you are offered.”

Also, beware of yo-yo finance scams that are widely seen at dealerships.

Here’s what happens during them: You sign the paperwork and drive away happy in your new car.

A few days or weeks later, the dealer calls you and says they couldn’t approve your financing at the price you previously agreed on. 

They tell you that you have two options: return the car or take out a new loan at a higher interest rate.

Believe it or not, some dealers state this may happen in the paperwork but if you don’t read the fine print, it can definitely take you by surprise. 

In addition, dealers may try to get you to focus on the monthly payment instead of the total cost of the car loan.

Don’t be shocked if they say something like “How much can you afford to pay for your car each month?”

They do this in the hopes that you won’t even think about the interest rate and just accept whatever they give you as long as you can afford the monthly payment. Shady.

To say the very least. 

While dealers may act like they’re on your side, don’t forget that just like most businesses, they exist to make money.

Don’t think of them as your “friends.”

The higher interest rate they offer you, the more money they’ll make.

They could care less about the fact that their rate may cost you thousands of your hard earned money.

Don’t Settle for Anything Less Than the Best Auto Loan Interest Rate

The amount of your down payment will depend on whether you are purchasing a new or used vehicle. 

Remember earlier how I mentioned that Grandpa always said that when you drive a new car off the lot it loses thousands of dollars in value?

Well, lenders think so too and because of the quick depreciation when the vehicle leaves the dealership they usually require a 20% down payment for a new car loan.

If you are in the market for a used vehicle and planning on financing the purchase, you will need to expect to put down 10%.

Normally there is no down payment on an auto loan refinance.

Want to know the best part?

You can use your vehicle trade-in towards that down payment.

Hopefully, you have some equity in the value of your existing whip and are able to simply trade-in the old car and not have to come out of pocket to make the down payment for the new one.

Best Auto Loan Rates With A Super Prime Credit Score (780 - 850)

If you have a credit score between 780 and 850, then you are in the highest credit score category which is also referred to as a Super Prime Credit Score. 

You can find the best auto loan rates by visiting our article for people with a Super Prime Credit Score

Best Auto Loan Rates With A Prime Credit Score (660 - 779)

If you have a credit score between 660 and 779, then you are in the second highest credit score category which is also referred to as a Prime Credit Score. 

You can find the best auto loan rates by visiting our article for people with a Prime Credit Score

Best Auto Loan Rates With A Non-Prime Credit Score (600 - 659)

If you have a credit score between 600 and 659, then you are in the middle credit score category which is also referred to as a Non-Prime Credit Score. 

You can find the best auto loan rates by visiting our article for people with a Non-Prime Credit Score

Best Auto Loan Rates With A Sub-Prime Credit Score (500 - 599)

If you have a credit score between 500 and 599, then you are in the second lowest credit score category which is also referred to as a Sub-Prime Credit Score. 

You can find the best auto loan rates by visiting our article for people with a Sub-Prime Credit Score

Best Auto Loan Rates With A Deep Sub-Prime Credit Score (300 - 499)

If you have a credit score between 300 and 499, then you are in the lowest credit score category which is also referred to as a Deep Sub-Prime Credit Score. 

You can find the best auto loan rates by visiting our article for people with a Deep Sub-Prime Credit Score


Annual Percentage Rates (APR), loan term and monthly payments are estimated based on analysis of information provided by you, data provided by lenders, and publicly available information. All loan information is presented without warranty, and the estimated APR and other terms are not binding in any way. Lenders provide loans with a range of APRs depending on borrowers' credit and other factors. Keep in mind that only borrowers with excellent credit will qualify for the lowest rate available. Your actual APR will depend on factors like credit score, requested loan amount, loan term, and credit history. All loans are subject to credit review and approval.

Leave a Reply

Your email address will not be published. Required fields are marked

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}