Best Auto Loan Rates By Credit Score (300 - 850)
By Mark B. Huntley, Esq.
Last Updated 11/19/19
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.
The auto loan rates that are offered to you will be based on your credit score and your ability to make the payments.
To get the absolute best rates you will need a credit score between 780 - 850, also known as a Super Prime credit score or excellent credit score.
If you don't have a credit score in that range, you will not be eligible for any of click bait APR rates that are too low to believe.
To understand how to get the best auto loan rates it is best to think of rates as lenders risk.
Current Auto Loan Interest Rates
60 Month new car
48 Month New Car
36 Month Used Car
Statistically, people with higher credit scores default much less than people with lower credit scores.
It makes sense then that people with excellent FICO scores would be offered the best auto loan rates.
But, don't be fooled!
Regardless if you have a high or low credit score, that doesn't guarantee that you will get the lowest interest rates.
In fact, the lender you choose determines your rates and many of the banks and credit unions gauge their customers with high APR's and excessive closing costs.
The only way to guarantee that you will get the best auto loan rates is to shop for multiple offers from multiple lenders.
It is free to get an car loan quote and it won't hurt your credit score because the lenders only make a soft pull on your credit.
We will discuss each of the five auto loan credit scoring categories and how you can find the best auto loan rates based on your score.
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.
Auto Loan Rates For A New Car
Don't be tricked into applying for the click bait advertisements promising unbelievably low APR percentage rates on your next new car auto loan.
Those rates only exist theoretically and in our research are only given to small group of members with large investment savings held by the bank, not based on credit score..
If you inquire they will tell you that they are sure you qualify but will have to double check.
But it gets worse!
Most of these companies are using deceptive advertising practices to lure you in and charge you a much higher interest rates than what you could have gotten from a reputable lender.
It is impossible for a lender to even guess what interest rate you will qualify for until they perform a soft pull on your credit records and see your credit score.
Best Used Car Rates
According to a Federally funded study on used auto loans, people with a credit score in the Excellent or Super Prime range were likely to save over $4,000 as compared to a 'prime' borrower.
Grandpa always said that as soon as you buy a new car and drive it off the lot, it loses thousands of dollars in value.
Stands to reason, that getting the best used car rates should further help save you potentially thousands of dollars by choosing to purchase a used car over a new one.
But here's the thing...
If your credit score is in the top range, you should qualify for a super prime APR rate, which should be the best rates available.
But, don't worry, there are still great rates for people who do not have a super prime credit score!
Top Auto Refinance Rates
If you have a credit score between 600 and 850, you can definitely refinance with this score!
A lot of people miss out on an opportunity to save themselves some money by not considering auto refinancing with a credit score in this range.
The interest rate you initially locked in at the time you purchased your car was based on your credit score at that time and the Federal prime interest rate when you financed your vehicle.
Do not apply for a refinance car loan if your credit score is below 600.
If either of those two factors has changed in your favor, you may be able to refinance with a lower interest rate and save a bunch of money and interest by replacing your old high-interest rate loan.
Depending on the APR of your original loan, you may also be able to keep the original loan payment amount, but cut multiple months or even a year off of the length of time you will have to pay off your loan.
Keep in mind that if your credit score is 600 or below, you probably will not be able to find a better interest rate by refinancing and the new loan will cost you more in interest than the original one.
Please note that while we're talking about some specific credit scores over 600 in this article, single digits shouldn't impact your refinance decision.
Auto loan interest rates are at a historic new low and virtually anyone who received an auto loan in the last couple of years can save money by refinancing today!
Who has the Best Auto Loan Rates? Credit Unions, Banks, or Online Lenders
Trying to figure out who has the best auto loan rates can feel like an impossible task.
It is natural to want to use your local Credit Union or Bank because you feel loyalty to the financial institution who you trust with your monthly banking needs.
In some instances, going directly through your Credit Union or Bank can be your best bet for the lowest interest rates.
However, local Credit Unions and Banks often times are limited on the loan programs they can offer or can't compete with the lowest online auto loan rates.
You also have to consider the time it takes to go to your local financial institution to obtain a quote for an auto loan.
It seems like for the past 20 years, Banks and Credit Unions have been cutting the numbers of employees there to help you and have been replacing them with fancy ATM machines.
Be careful if you get an auto loan from a Credit Union or Bank that you have a checking, savings, or CD account with. Some financial institutions require you to sign a document allowing them to take payment without your permission if you do not pay.
In comparison, you can obtain four loan offers within two minutes of filling out a short, one-page application with LendingTree.
Even if you decide to see what your Bank or Credit Union has to offer, getting an online lender quote is free and takes next to no time.
Purchasing a car can be a stressful endeavor because of all the decisions you must make with that ‘helpful’ high-pressure car salesman stuck to your hip.
A great way to help alleviate some of that pressure and stress is by getting pre-approved for an auto loan long before you walk onto the car dealership lot.
Many people do not realize that they do not have to use the dealership's financing options.
In fact, according to U.S. News...
“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.”
Typically the better financial move is to shop for the best auto rates online, get a pre-approval letter, and take that to the dealer where you want to buy your car.
Best Online Auto Loan Rates By State
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!
5 Non-Credit Factors that Affect Your Monthly Payment
Let’s not assume your credit is the ONLY variable in getting you a great auto rate.
As you’ve already seen, your monthly payment will differ if you’re looking at a new vs used car, if it’s a refinance, or based on the length of the loan.
For example, you might have a credit score of 500 to 850, but wouldn’t be able to qualify for the rates above due to the following five factors.
Income & Debt-to-Income
A key factor in how much a lender is willing to lend you is how much monthly income you have, regardless of your credit score.
The relationship between the amount of money you make in a month and the amount of your monthly bills is called your debt to income ratio aka DTI.
Most lenders do not want your debt to income ratio to exceed 36-40% for an Auto Loan according to Pocket Sense.
This means your total expenses, which will include your proposed monthly auto loan, will need to be within 40% of your DTI.
If your DTI is higher, then lenders may require you make a larger down payment and/or charge you a higher interest rate for the additional risk of lending someone money with a high debt to income ratio.
The “Right” Credit Score
You may have visited this article thinking you have a FICO score somewhere in the 600 - 850 range.
The truth is, depending on where you checked your score, you may not be using the same score the auto lenders use.
In the U.S. today most people receive a free credit score with their credit card services or other financial institution supported websites such as Chase Credit Journey.
The problem with these credit scores is that they are usually a "FAKO" score, not a FICO score.
FAKO scores, such as Vantage, intended use is for educational purposes and not to be relied upon for financial decisions.
The largest producer of FAKO scores is the VantageScore 3.0 (they are launching 4.0 soon).
What’s the difference?
Well, both FICO and Vantage pull your credit history from the big three credit agencies; Experian, Equifax, and TransUnion, to calculate your credit scores.
However, the credit scores that FICO generates from your account history at the three credit bureaus are used to assess the risk of a borrower by 90% of lenders in the U.S.
The VantageScore 3.0 is given away free on websites like Credit Karma and in 2018 was prohibited from being used by Fannie Mae and Freddie Mack for real estate mortgages.
Consequently, as you can imagine, the Vantage credit score can be volatile and inaccurate.
For example, according to CreditCards.com, the average VantageScore in California is 712 to 722.
Which means that the credit score you think you have right, now may not be an accurate credit score at all.
You might thing you have a credit score of 705, but in reality, your FICO could be over 775.
You may even qualify for a super prime loan and have wasted your time reading this article.
To get a truly Free Credit Score you can read our definitive guide on free credit scores.
You can learn your true FICO credit scores for Experian, Equifax, and TransUnion; by visiting MyFICO and signing up today!
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.
Improving Your Credit Score
With a credit score between 660 and 779, you are going to qualify for prime loans at a higher interest rate than if you were able to increase your credit score to 780+.
If you are right on a FICO score category edge it may make sense to consider spending 30, 60, or 90 days building your credit.
The time and money spent would put you in a lower risk bracket and open the doors to much more financial freedom and better opportunities.
Another option to get a vehicle loan with a lower interest rate would be to ask a family member to co-sign on the loan.
The auto loan co-signer would become the primary borrower and you would be the secondary borrower.
They would be responsible for making the payments on the loan if you failed to do so, but you would qualify for an auto loan based on their credit score and not yours.
If you know someone with a good credit score, it may not hurt to ask them to be your car loan co-signer.
Regardless of your credit score, lenders want to see that you have a good employment history.
Frequently, when people are younger and in their late teens or early 20’s they will change jobs often.
This is a red flag to a lender who wants to be able to check the box next to ‘reliable income’ whereas if you are constantly changing jobs, that may not be the case.
To avoid being denied an auto loan due to shaky employment you will need to stay at your jobs for a longer period of time.
Best Auto Loan Rates With A Super Prime Credit Score (780 - 850)
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)
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)
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)
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)
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.