What Is a Good Interest Rate For a Car Loan?

While shopping for your next vehicle to cruise through Columbia and Lawerenceburg, you’re probably wondering how to secure an auto loan with a low-interest rate you can feel good about. But with all the chatter from friends and family, you honestly can’t figure out what is considered a good interest rate for a car loan. No need to worry, the finance center at Sharp Chrysler Dodge Jeep RAM is here to explain everything you need to know before financing your next ride.

How to Get a Good Interest Rate

Before we explain how to get a good interest rate, you first need to understand what makes an interest rate “good”. The average interest rate for used cars is currently 10.22% according to Market Watch. (August 2023). This is a good starting point that will help you know what to expect when applying for an auto loan.

Next, the most important factor in determining your unique interest rate is your credit score. The best interest rates are granted to shoppers who’ve done well with maintaining a credit profile that boasts scores in the 800 range, which can yield lower interest rates around 3.68% for used cars. So, the key to a “good” interest rate is having good credit. If your credit score happens to fall in the non prime range of 601-660 you can expect your interest rate to be 10.33% and above. And if your credit score is lower than 600 be prepared to pay more than 15.00%!

Before you apply for financing, find out which range your credit score falls into so you are not blindsided when you visit our dealership.

How Do I Find Out My Rate?

Submitting a credit application is the only way to know exactly what your interest rate will be since there are other criteria that go into determining your finance terms. The value of the car you’re buying will be taken into consideration since most lenders have stipulations on the amount they are willing to lend in relation to how much the vehicle is worth. Your credit score determines your risk level, if a bank sees you have a good history of paying your debts they will be more likely to finance your car with a lower interest rate. In the meantime, you can use our payment calculator to get an idea of what you may be expected to pay monthly.

Learn More About Auto Financing at Sharp Chrysler Dodge Jeep RAM

If you’re still unclear on what is a good interest rate for a car loan, our car buying tips guide may have the information you need. Or just stop by our dealership in Pulaski and speak with a member of our finance team, we’re only a short drive from Lewisburg so don’t hesitate to contact us!