What Is a Good Interest Rate for a Car Loan?

The car-buying process can sometimes be confusing, so it’s only natural to wonder, “What is a good interest rate for a car loan?” In this guide, we’ll help you understand the average interest rate and what you can do to improve it. When you’re looking to upgrade your Indianola commute with a new or used car, you want to ensure you get the best possible interest rates. Learn more about good interest rates for a car loan below, and contact the team in our finance center to discuss your car-buying questions. 

Understanding the Average Interest Rates

When you’re searching for a new car for your trips around Indianola and SE Des Moines, the average interest rates on a car loan can give you an idea of what to expect from a lender. A car loan’s annual percentage rate, or APR, can vary depending on your debt-to-income ratio and credit score. Take a look at the average APR based on your credit score below:

Average interest rates for new cars:

• 781-850: 4.75% APR
• 661-780: 5.82% APR
• 601-660: 8.12% APR
• 501-600: 10.79% APR
• 300-500: 13.42% APR

Average interest rates for used cars:

• 781-850: 5.99% APR
• 661-780: 7.83% APR
• 601-660: 12.08% APR
• 501-600: 17.46% APR
• 300-500: 20.62% APR

How Can You Get the Best Interest Rate?

If you have time to plan your next upgrade, it may be a good idea to see if you can get the best interest rate possible. It’s possible to obtain a good interest rate for a car loan by keeping these tips in mind: 

• Check your credit report for any issues or inconsistencies you can clear up. A higher credit score allows you to move into the next APR range and lower your interest rate. 
• Show the lender you’re a responsible borrower. Bring proof of income when visiting a lender. It’s also a good idea to pay down any outstanding balances to reduce your debt-to-income ratio. 
• Be ready to negotiate. You may be able to negotiate for a better interest rate if you have a good credit history and a steady income.
• Understand all the terms of the auto loan and auto loan rates. While the payment is an important factor, it’s also worth considering the term length. The faster you pay a loan off, the less you’ll spend on interest. While long-term loans allow you to save on monthly payments, you may end up spending more than you had to.

Once you’ve found a good interest rate for a car loan you might qualify for, head over to our payment calculator to get an idea of your buying power on your next car loan. 

Apply for Financing With DeYarman Chrysler Dodge Jeep RAM!

Now that you know the answer to the question, “What is a good rate on a car loan?” Take the next steps with our team at DeYarman Chrysler Dodge Jeep RAM. Our finance team can guide you through applying for financing online and taking home the right Chrysler, Dodge, Jeep, RAM that fits your budget.