What is a Good Interest Rate for Your Car Loan?

Finance Paperwork with Glasses

If you’re considering financing a new or pre-owned vehicle, you may be wondering, “What is a good interest rate for a car loan?” The finance team at Mercedes-Benz of West Covina can answer your questions! We can help you find the right loan and interest rate for your lifestyle, and assist you with applying online via our secure online application. Below, you’ll find a chart that outlines the average credit score for a new or a used car loan, as well as the Annual Percentage Rate (APR). 

New & Used Car APR

Average Credit Score for New Car Annual Percentage Rate Average Credit Score for Used Car Annual Percentage Rate
781-850 3.17% 781-850 3.8%
661-780 4.03% 661-780 5.48%
601-660 6.79% 601-660 10.1%
501-600 10.98% 501-600 16.27%
300-500 13.76% 300-500 19.32%

What is a good car loan rate? Based on this chart, it’s anywhere between 3.17% and 13.76%, depending on your credit score. 

How Do You Get the Best Interest Rate?

Planning ahead is the best thing you can do to get the lowest interest rate possible. Keep the following in mind before applying for/deciding on a car loan: 

  • Check your credit history and credit score. If you have excellent credit, your interest rate will be lower — and vice versa. 
  • If you need to improve your credit, consider using a credit card to make smaller purchases, and then pay them off immediately. 
  • Be ready to negotiate. Apply with a few different car loan companies and compare their loan terms and interest rates. This will give you an idea of what kind of loan options are available to you.
  • Pay attention to the details of the loan — not just the interest rate. Make sure you understand every aspect of your auto loan. If you don’t, ask questions! 

What is the Average Interest Rate on a Car Loan?

The average interest rate on a three-year loan is about 3% to 4.5%. You may receive a different offer, based on the loan amount you need and whether you have not-so-perfect or good credit. Where you obtain the loan can also make a difference; credit unions, banks, and loan companies can offer different rates. Again, it’s a good idea to shop around for the best possible loan and compare interest rates, loan payments, and more. When applying for a loan, be sure to restrict your applications to a two-week window. This will help minimize the damage to your credit score from hard inquiries. 

Apply for Financing at Mercedes-Benz of West Covina

Now that you know the answer to the question, “What is a good interest rate for a car loan,” it’s time to find the right loan for you! Our finance team can assist you with the pre-approval process and answer any additional questions you may have, such as “What is a simple interest loan?” Don’t hesitate to contact us online, or give us a call at 844-314-4913 to speak with us directly!

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Mercedes-Benz of West Covina 34.071008, -117.902525.