What Is the Average Car Loan Interest Rate by Credit Score?

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


, - May 31, 2019

The average interest rate for auto loans can fluctuate a number of times in a year, since rates are not only determined by factors such as your credit score and the state you live in, but by the Federal Reserve bank, which sets a benchmark interest each quarter.

According to Experian’s State of the Automotive Finance Market report covering the fourth quarter of 2018, we saw new car finance rates pass 6% for the first time in 10 years – which means interest rates are at a 10-year high, and may continue to increase during the next few years.

Average Car Loan Interest Rates by Credit Score

Experian is one of the three major credit bureaus that auto lenders report to. In their quarterly report, they calculate the average loan interest rate by credit tier, not credit score. Wondering what these interest rates are?

Here’s what they found the average car loan interest rate to be in the fourth quarter of 2018:

Deep subprime (300 to 500 credit score)

  • New car rate: 14.88%
  • All used car rate: 19.62%
  • Franchised dealer used car rate: 18.55%
  • Independent dealer used car rate: 20.56%

Subprime (501 to 600 credit score)

  • New car rate: 12.17%
  • All used car rate: 16.78%
  • Franchised dealer used car rate: 15.62%
  • Independent dealer used car rate: 18.33%

Nonprime (601 to 660 credit score)

  • New car rate: 7.91%
  • All used car rate: 10.91%
  • Franchised dealer used car rate: 10.29%
  • Independent dealer used car rate: 12.61%

Prime (661 to 780 credit score)

  • New car rate: 5.01%
  • All used car rate: 6.38%
  • Franchised dealer used car rate: 6.24%
  • Independent dealer used car rate: 6.99%

Super prime (781 to 850 credit score)

  • New car rate: 4.19%
  • All used car rate: 4.69%
  • Franchised dealer used car rate: 4.69%
  • Independent dealer used car rate: 4.74%

All credit tiers

  • New car rate: 6.13%
  • All used car rate: 9.59%
  • Franchised dealer used car rate: 8.64%
  • Independent dealer used car rate: 12.06%

As you can see, the lower someone’s credit score, the higher the interest rate they’re likely going to qualify for. Even those with excellent credit scores (super prime) get high interest rates compared to only a few years ago, while qualifying for a zero down auto loan is also more difficult.

How to Get the Lowest Rate Possible with Bad Credit

If you’re one of many Americans who have bad credit and need a car loan, how do you get the best interest rate possible? With poor credit, you're likely to get a higher than average interest rate, but you can try finding a lower one with pre-approved financing.

Direct lenders, such as banks or credit unions, may offer a better deal than indirect lenders. If you have a good relationship with your bank or credit union, it’s possible to get pre-approved for a better APR than a subprime lender can offer even if you have bad credit. It’s also wise to shop around, too, to see if any other lenders can offer you a better deal.

If you can’t get a pre-approval, another way you might qualify for a lower interest rate is by adding a cosigner to the loan. When you add a cosigner, the lender takes their good credit into account and may offer you a lower interest rate as a result. This isn’t always possible, so make sure you discuss this with the lender before you make any decisions.

The Bottom Line

The better your credit score, the lower the APR you’re likely to qualify for. Building good credit is tough, and can take years – especially if you’re starting from scratch. An auto loan is a great way to help build credit, but finding a dealership that has the right lending resources isn’t going to be easy, but that’s where we come in.

CarsDirect helps consumers get connected to dealers near them that know how to work with unique credit situations. Fill out our free car loan request form, and we'll get the process of matching you with a local dealership started right away.

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


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