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How to Get the Best Auto Loan Interest Rate

The interest rate you're able to get on a car loan plays a big part in how much you end up paying for a vehicle. Knowing how to get the best rate can make a difference on a large purchase.

As you can see from the sample rate sheet below, auto lenders place consumers into tiers based on their credit score. These tiers determine the auto loan interest rate you'll pay. How old the vehicle is, its mileage, where you live, and a few other factors can also influence the rate you're able to qualify for.

Year & Terms Sample Credit Union Rates
Model Year Terms Titanium
740+
Platinum
700 - 739
Diamond
660 - 699
Gold
620 - 659
Silver
580 - 619
Bronze
540 - 579
2010 & Newer 1-60
61-72
73-84
1.99%
2.49%
2.99%
2.49%
2.99%
3.49%
3.49%
4.19%
4.69%
7.29%
7.79%
N/A
12.99%
16.99%
N/A
16.29%
N/A
N/A
2009 1-60
61-72
73-84
1.99%
2.49%
2.99%
2.59%
3.29%
3.79%
3.89%
4.49%
5.19%
7.39%
8.39%
N/A
13.89%
17.89%
N/A
16.79%
N/A
N/A
2008 1-60
61-72
73-75
2.39%
2.89%
3.39%
3.09%
3.59%
4.09%
4.49%
5.19%
5.69%
7.69%
8.69%
N/A
14.39%
N/A
N/A
16.99%
N/A
N/A
2007 1-60
61-72
3.09%
3.59%
3.89%
4.39%
5.29%
6.29%
7.79%
8.79%
14.49%
N/A
17.09%
N/A
2006 1-60 3.69% 4.39% 6.39% 9.29% 14.59% 19.99%
2005 1-48 3.99% 4.69% 6.69% 9.59% 14.69% 19.99%
2004 1-36
37-48
5.49%
6.99%
6.19%
7.69%
8.19%
9.69%
11.09%
12.59%
14.99%
16.49%
19.99%
19.99%

You're more likely to get the best auto loan interest rates if you have a credit score of 740 or higher and finance a new car for a term of 60 months (five years) or less. Improving your credit score can result in you saving hundreds to thousands of dollars during the length of your auto loan.




Does Your Credit Score Affect Your Interest Rate?

Your credit score is the most important factor lenders consider when determining your auto loan interest rate. Car buyers with good credit can qualify for the best rates, while rates given to borrowers with bad credit will typically be higher.

You should know where you stand with your credit before applying for any loan or line of credit. This helps you know what to expect so you can make sure you get the same terms borrowers in similar credit situations typically qualify for.


How Much is Your Credit Score Costing You?

Borrowing money is more expensive when you have a poor credit score. The higher the auto loan interest rate, the more you'll pay in finance charges. The following chart is based on a $15,000 auto loan and shows how a lower credit score results in a more expensive loan.

Sample Credit Score Cost (based on a $15k finance)
Credit
Score
Loan
Term
Sample
Rate
Payment Total of
Payments
Monthly Credit
Score Cost
Total Credit
Score Cost
750 72 2.50% $224.57 $16,168.70 $0 $0
725 72 3.50% $231.28 $16,651.87 $6.71 $483.16
700 72 4.00% $234.68 $16,896.80 $10.11 $728.09
675 72 5.00% $241.57 $17,393.33 $17.01 $1,224.62
650 72 6.00% $248.59 $17,898.72 $24.03 $1,730.01
625 72 7.00% $255.74 $18,412.93 $31.17 $2,244.22
600 72 8.00% $263.00 $18,935.90 $38.43 $2,767.20
575 72 9.00% $270.38 $19,467.58 $45.82 $3,298.88
550 60 11.00% $326.14 $19,568.18 $101.57 $3,399.48
525 60 13.00% $341.30 $20,477.77 $116.73 $4,309.06
500 60 15.00% $356.85 $21,410.94 $132.28 $5,242.23
475 60 17.00% $372.79 $22,367.32 $148.22 $6,198.61
450 48 19.00% $448.50 $21,528.09 $223.94 $5,359.38
425 48 21.00% $464.49 $22,295.30 $239.92 $6,126.60
400 48 23.00% $480.77 $23,077.06 $256.21 $6,908.35
None 48 25.00% $497.36 $23,873.13 $272.79 $7,704.43

Compared to a borrower with an excellent 750 credit score, someone with a credit score of 600 will pay an additional $38.43 each month and $2,767.20 more over the length of the loan.


How to Improve Your Credit Score and Auto Loan Interest Rate

If you want to improve your credit score and get the best auto loan interest rate, you need to understand how it's determined. Most lenders use FICO scores when evaluating applicants. These five factors are used to calculate your FICO score:


  • Payment History: 35%
  • Amounts Owed: 30%
  • Length of Credit History: 15%
  • Credit Mix: 10%
  • New Credit: 10%

To improve your credit, the two most important things you can do are pay all your bills on time and reduce your credit card balances. You should also get current on any outstanding bills, not close or open any accounts, and check your credit reports regularly.

You're encouraged to keep an eye on your credit reports because it's not uncommon for them to have errors. You should review your reports from each of the three major credit reporting agencies (Equifax, Experian, and TransUnion) and dispute any errors you find.

There are two ways to do this: you can either do it yourself or hire a professional to help. For those that choose to do it alone, we've included links so you can initiate an online dispute with each of the three credit bureaus:

For those who want a helping hand, a professional credit repair company may be able to identify more items to dispute and will know the best way to handle unique circumstances. Click here to receive a no-obligation quote, or call 888-286-5211 for a free legal consultation.


If You're Happy with Your Credit Score

It's true that getting an auto loan can help you improve your credit score if you make every payment on time. CarPaymentsUnder.com wants to help you find financing. Select the score closest to yours below to view used cars and payment options.

If your credit score is less than 625, we recommend that you request an auto loan before shopping online for a used car. Our network of dealers has the lending resources to help people in many challenging credit situations.