What’s the Average Car Loan Interest Rate?

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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.


, - February 28, 2019

There’s no easy answer to what the average car loan interest rate is since interest rates are based on credit scores. One thing’s for sure: unless you have excellent credit and qualify for a special zero APR program, you’re going to pay interest charges on an auto loan. Just how much interest you have to pay, and what interest rate you qualify for, depends on your credit score, loan term, and, in some cases, the vehicle being financed.

Average Car Loan Interest Rate by Credit Score

According to ValuePenguin, the current average car loan interest rate in the US among all credit scores is 4.21 percent on a 60-month loan. Using the FICO credit score range, ValuePenguin also determined these were the average interest rates for a 60-month new auto loan in their respective credit score ranges:

  • 850 - 720: 3.60%
  • 719 - 690: 4.95%
  • 689 - 660: 7.02%
  • 659 - 620: 9.72%
  • 619 - 590: 14.06%
  • 589 - 500: 15.24%

As you can see, the higher your credit score, the lower the interest rate you typically qualify for. Remember, these are just averages, and are based on a 60-month new car loan. If you decide to finance a used vehicle, or have a loan term shorter or longer than 60 months, the interest rate you qualify for changes. This is why it’s extremely important you rate shop in order to find the best deal possible.

How to Get a Better Interest Rate

If you’re worried about your credit score disqualifying you for a good interest rate, there are steps you can take that could get you a better score. To do this, you need to watch your credit and build a positive credit history. Make sure you pay all your bills on time and in full each month, pay down credit card balances, and take out additional credit sparingly. Over time, you should see your credit score improve.

If you can’t wait to improve your credit for a better interest rate and need a car now, you can apply for a subprime auto loan. Once your credit score improves after a year or two, you may be able to refinance for a better interest rate.

The Bottom Line

Your credit score plays a big role in determining the interest rate you qualify for. Interest expense is a part of auto financing, and it’s extremely difficult to qualify for a zero percent financing program – especially when you have bad credit. But as long as you start using good credit habits, and avoid any delinquencies, you should see your score improve.

If you need some help locating a dealership that can help you with bad credit auto financing, we’ve got you covered. At CarsDirect, we work with a nationwide network of special finance dealers that have the lenders available that can help people in all sorts of credit situations, including bad credit, no credit, bankruptcy, and even repossession.

Don't wait any longer to get the vehicle you need! Just fill out our free and easy online auto loan request form to get the process started.

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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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