What Is a Good Interest Rate for a Car Loan?

Interest Rate

Knowledgeable Sharon drivers know that the upfront cost is only part of the picture when it comes to getting a good deal on a car. The interest rate on the car loan is also important, as it can determine the size of monthly payments, and of course, the amount you pay in interest in the long run. So, what is a good interest rate for a car loan? Our finance department wants you to make an informed decision when buying your next new car. So, we delve into that topic below and break out the average car loan interest rate by several factors.

The Length of the Term Can Impact the Interest Rate

If you want to get the best deal on a car loan, one of the best ways is to pick the shortest time possible to pay it back. This means you’ll have to pay more each time, but you’ll have to make fewer payments overall. That way, you won’t have to pay as much extra money for interest over time. Here is the average car loan interest rate by term (all numbers used below are from Q4 2022):

Average Car Loan Interest Rate by Length of the Loan:

  • 36 Month – 6.06%
  • 48 Month – 6.09%
  • 60 Month – 6.1% 

What Is a Good Interest Rate for a Car Loan When Buying New?

One of the advantages of buying new instead of used is that interest rates are often a little lower depending on your credit score. You’ll want to take that into consideration when deciding whether to buy new or used. Here’s how interest rates on new cars break out by credit score:

Average Car Loan Interest Rate on a New Car Loan by Credit Score:

  • 781–850 – 3.84%
  • 661–780 – 4.9%
  • 601–660 – 7.25%
  • 501–600 – 10.00%
  • 300–500 – 12.93%

What Is a Good Interest Rate for a Car Loan When Buying Used?

Used car loans can carry a higher interest rate for customers with average to lower than average credit scores. Here is how these rates break out by credit score:

Average Car Loan Interest Rate on a Used Car Loan by Credit Score

  • 781–850 – 3.69%
  • 661–780 – 5.47%
  • 601–660 – 9.81%
  • 501–600 – 15.86%
  • 300–500 – 19.81%

Every Lender is Different

Comparison shopping is not just a good strategy at the grocery store. Shopping around for auto loans is also important, as interest rates can vary widely based on the lender. The finance department at Shenango Honda does that work for you by leveraging our relationships with multiple lenders to get you the best rate possible. That way, you don’t have to visit every lender in the Hubbard trying to find the best rate. Here is how the range of interest rates can vary by lender:

Average Car Loan Interest Rates Offered by Lenders:

  • Bank of America – 6.29%
  • BMO Harris Bank – 7.9%
  • Chase – 7.14%

Let the Finance Department at Shenango Honda of Hermitage Help

We will do everything in our power to put you behind the wheel of your next car, regardless of your credit situation. We make it so easy, you can calculate your payment and get an offer on your trade before you ever step foot on our lot. We’re conveniently located near Mercer. Drop by or contact us today!

 

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