A new vehicle is an achievement for most people. While there is always the option to pay for your car in cash, it is rarely a viable choice. That is where most people turn to auto loans. Angela Marie Kovacs explains finding the right auto loan to finance your car is an important step.
While many factors determine the interest rate you are going to pay, credit score plays a major role. Thus, knowing the average car loan interest rate by credit score helps you understand what to expect.
“Credit scores determine whether you are eligible for a loan, the rate of interest, payment amounts, and the terms of the loan. Maintaining a high credit score gets you better deals.”Anglea Marie Kovacs Stated.
Average Car Loan Interest Rate by Credit Score
Experion reports the average credit score required to get an auto loan for a new car at less than 6% interest as 715. A detailed breakthrough is given below.
|Average Interest Rate
This slightly varies for used cars. The average interest rates for used cars by credit score are as below.
|Average Interest Rate
A Zero Percent Annual Percentage Rate Loan
While a zero percent interest rate seems like a distant dream, it is absolutely possible. People with a healthy credit history and great credit scores can apply for these APR auto loans that have no interest added to the loan at the time of repayment. You need an APR of at least 740 to qualify.
“If you have made late payments or have any negative mark on your credit report, the processing might take time. In fact, even your credit history might take time to bounce back to acceptable levels for APR auto loans.” Angela Marie Kovacs Explains.
Are Credit Scores Common Across Lenders?
While you have a personal credit score that many lenders consider, they also look at industry-specific credit scores that help them determine how credible you are and whether you are eligible to pay the loan back or not.
This score includes information about whether you have filed for bankruptcy involving a car loan or lease, your history, timely repayment, and previous repossessions or collections in an auto loan. All lenders are free to choose which credit score to look at and what measures to use to identify the loan rates suited for you.
Since the requirements also vary from one lender to another, make sure you repay loans on time, maintain your score, and so on.
Minimum Credit Score and Other Requirements
Even if you do not have exceptional credit scores, getting a good auto loan at decent interest rates is possible. You need a minimum of 500 to 600 to be considered a potential applicant for an auto loan. The offers can be made much better by
- Building a good credit score and history.
- In case of high interests, you can opt to have a cosigner with a good credit score and history.
- Refinance with lower interest rates.
- Negotiate terms with the lender.
“While the credit scores are a centralized measure, you will not be made aware of which particular credit score the lender is looking at.” Angela Marie Kovacs concluded.
That is why it is important to maintain a uniform and good credit score and healthy credit history. This helps to speed up the loan process and ensures good auto loan interest rates across different lenders.