Average auto loan rates by credit score in 2021



Average auto loan rates always vary depending on market conditions. In 2021, new car loan rates vary from 2.34% to 14.59%. The difference between a low and a high Annual Percentage Rate (APR) is based largely on your credit score.

This article explains the factors that determine how lenders set APRs and offers tips for finding the lowest auto loan rates. Also read our review of the best auto credit suppliers to learn more about and compare the major lenders in the industry, or visit AutoCreditExpress.com to start comparing rates right away.

In this article:

What Determines Average Auto Loan Rates?

The most important factor that determines your auto loan rates is your credit score. The higher your score, the lower your APR will be. The best rates are reserved for those with a credit score above 800, but depending on Equifax, any score above 670 makes you a “low risk borrower” and opens the door to lower average auto loan rates.

However, your credit score is not the only determining factor. Employment status, income, and the type of vehicle you buy also affect rates. Having a steady stream of income and buying a newer vehicle will result in better auto loan rate deals.

What is a good interest rate for an auto loan?

Anything less than four percent is a great interest rate for auto loans. However, depending on your situation and your credit score, it may not be possible to find a rate lower than four percent.

To give you an idea of ​​the average auto loan rates you can expect based on your credit score, check out the table below. These describe the average auto loan rates for new and used cars based on information from Q2 2021 Experian State of the Auto Finance Market report.

Average auto loan rates by credit score
Credit score Average APR for new cars Average APR for used cars
781 to 850 2.34% 3.66%
661 to 780 3.48% 5.49%
601 to 660 6.61% 10.49%
501 to 600 11.03% 17.11%
300 to 500 14.59% 20.58%

You can see that the rates change drastically depending on the credit score. It also affects what you repay to a large extent. Suppose you took out a $ 10,000 car loan with a term of 60 months to purchase a new vehicle. If you have great credit and get a 2.34% rate, you would pay $ 606 in additional interest. In other words, it costs $ 606 to take out a loan of $ 10,000 with that interest rate.

Now let’s say you have a decent score of 650 and get a 6.61% rate. In this case, you would pay $ 1,771 in additional interest on top of the loan.

If a fair score gives you an average auto loan rate of 11.03%, you would be paying $ 3,054 in interest. And if you had a very high rate of 14.59%, you would pay $ 4,145 in interest on the $ 10,000 loan. Ouch.

Your credit score summarizes your credit history as a number. For lenders, your score predicts the likelihood of you making payments on time. People with lower credit scores end up paying higher interest rates because lenders consider them to be at a higher risk of late payment or default.

On the other hand, people with good credit scores find lower interest rates because lenders see them as good candidates for paying off their loans. Life is going on, and you may have a low score because of an event that happened in the past on your credit report. Unfortunately, the lowest rates are only available to the people with the highest scores.

Here’s how Experian ranks credit score ranges:

  • Super bonus: 781 to 850
  • First: 661 to 780
  • Not first: 601 to 660
  • Subprime: 501 to 600
  • Deep subprime: 300 to 500

Tips for Lowering Average Auto Loan Rates

The best way to lower the average auto loan rates that you find is to improve your credit score. This can be done by paying your bills on time and keeping your credit card balance low. Paying your monthly installments in full can also help. Unpaid debts or collection notices can affect your credit rating, so paying them off will improve your credit.

However, building your credit score can be time consuming and the tips above may not be practical for everyone, especially for those with limited income who struggle to pay a minimum balance each month. .

There are a few other things that can lower your auto loan rates:

  • Get someone to co-sign: Many lenders allow you to have someone else co-sign a loan. A co-signer with strong credit can lower your interest rates.
  • Buying a new car instead of a used one: While new cars are more expensive, lenders generally offer lower auto loan rates for new car purchases.
  • Pay a larger deposit: A larger down payment can lower your interest rate and reduce the time it takes to pay off your loan.

You can also consider trying to pay off your loan on a shorter timeframe. While this won’t lower the interest rate on your loan, it does mean that you pay off your loan sooner and will have to pay less interest. However, be sure to read the language of your loan agreement carefully. Some lenders charge a prepayment penalty, which is an additional fee if you pay off your car loan too early.

Where to find the best auto loan rates

The table below shows the lenders who offer the lowest auto loan rates. However, just because a loan provider offers low APRs doesn’t mean everyone is eligible for this rate. Loan terms vary among individuals and there is no one best lender for all drivers.

Some lenders, like PenFed, offer car buying services. This means that you can buy a car and finance it all in one place. In addition, some lenders offer both buy and refinance loans, while others offer one or the other.

Best auto loan rates

The lowest

Auto loan rate


Credit score

Amount of the loan

PenFed Credit Union 0.99% 610 $ 500 to $ 100,000
Automatic payment 1.99% 630 $ 2,500 to $ 1,000
Automatically approve 2.25% 580 $ 5,000 to $ 85,000
Genius Tariff 2.39% 550 $ 10,000 to $ 90,000
myAutoloan.com 2.49% 575 $ 5,000 +
Tresl 2.49% 500 $ 5,000 to $ 100,000
Auto Express Credit Varies depending on the lender No minimum credit Varies depending on the lender

Drivers with poor credit are unlikely to be eligible for the interest rates shown in the table above. If you have poor credit, try comparing offers from multiple lenders using a site like AutoCreditExpress.com. This site also specializes in finding loans for borrowers with bad credit, so if you are having trouble finding auto loan deals, it is worth checking out.

When comparing loans, be sure to only submit applications to auto lenders that allow you to pre-qualify without a credit check. Strict credit checks can hurt your credit score even more. A good first step is to use an auto loan calculator to predict your payment amount and the total cost of your loan.

How to apply for a car loan

You can apply for an auto loan online, at a financial institution, or at the dealership when purchasing a car. Some lenders allow you to browse the inventory of participating dealers after your loan has been pre-approved. Since most loan applications require vehicle information, you may need to think about a specific car before you apply.

When applying for a car loan, make sure you have the following information handy, as it may be required for prequalification and will definitely be required before submitting your formal loan application:

  • Personal data such as name, address and age
  • Social Security number
  • Gross annual income information
  • Vehicle information such as age, mileage and vehicle identification number (VIN)

While this is not required during prequalification, before you can get your loan, you may need additional documents such as your driver’s license, pay stubs, and personal references.

If you plan to have someone co-sign your loan, that person will also need to provide the information and documents mentioned above.

To start comparing the best auto loan rates from several lenders, visit AutoCreditExpress.com.

FAQ: Average Auto Loan Rates


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