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Average Car Loan Interest Rates by Credit Score (2024): Complete Guide & Analysis
Key Takeaways
- Average new car loan interest rates currently stand at 6.84%, while used car rates average 12.01%
- Borrowers with super-prime credit scores (781-850) receive the lowest rates, averaging 5.25% for new cars
- Credit scores below 500 face the highest rates, averaging 15.77% for new cars and 21.55% for used cars
- Federal Reserve policies continue to influence auto loan rates, with potential decreases expected
Understanding Average Car Loan Interest Rates
Shopping for a car loan? Understanding average auto loan interest rates can be your secret weapon in negotiating better terms. Whether you're eyeing a sleek new sedan or a reliable used SUV, knowing what others with similar credit scores are paying helps you determine if you're getting a fair deal.
Think of your credit score as your financial report card – it's one of the primary factors lenders use to determine your interest rate. The higher your score, the more likely you are to secure those coveted low rates. But it's not just about your credit score; factors like your income, loan term, and even the type of vehicle you choose play crucial roles in determining your rate.
Current Average Auto Loan Rates by Credit Score (2024)
According to Experian's latest Automotive Finance Market report for Q2 2024, here's a comprehensive breakdown of average auto loan rates based on credit score ranges:
New Car Loan Rates:
- Super-prime (781-850): 5.25%
- Prime (661-780): 6.87%
- Non-prime (601-660): 9.83%
- Subprime (501-600): 13.18%
- Deep subprime (300-500): 15.77%
Used Car Loan Rates:
- Super-prime (781-850): 7.13%
- Prime (661-780): 9.36%
- Non-prime (601-660): 13.92%
- Subprime (501-600): 18.86%
- Deep subprime (300-500): 21.55%
How Auto Loan Rates Have Changed
The auto loan market has experienced significant changes since 2022, primarily due to Federal Reserve policy adjustments. Recent data from major industry sources shows:
- Edmunds reports September 2024 averages: 7.1% for new cars, 11.2% for used cars
- Cox Automotive indicates current volume-weighted averages: 9.35% for new vehicles, 13.90% for used vehicles
Factors Affecting Your Auto Loan Rate
Several key factors influence the interest rate you'll receive:
Primary Factors:
- Credit Score: Your financial track record
- Income and DTI Ratio: Your ability to repay
- Loan Term: Shorter terms often mean lower rates
- Down Payment: Larger down payments can reduce rates
- Vehicle Type: New vs. used, age, and condition
How to Get the Best Auto Loan Rate
Follow these expert-recommended steps to secure the most favorable rate:
- Check your credit score before applying
- Shop multiple lenders within a 14-day window
- Consider getting pre-qualified
- Make a substantial down payment
- Choose shorter loan terms when possible
- Look into refinancing options if rates drop
Smart Ways to Save on Your Auto Loan
Looking to maximize your savings on your car loan? Consider using Kudos, a free AI-powered browser extension that helps you optimize your credit card rewards while shopping for vehicles online.
Kudos can help you:
- Identify the best credit card to use for your down payment
- Maximize rewards on any car-related purchases
- Track potential savings across different dealers
- Get personalized recommendations for credit cards with the best auto-related rewards
Expert Tips for Auto Loan Shopping
- Get pre-approved before visiting dealerships
- Compare at least three different lenders
- Read the fine print carefully
- Consider credit unions for potentially lower rates
- Time your purchase during promotional periods
Frequently Asked Questions
What is the average car loan interest rate in 2024?
The overall average is 6.84% for new cars and 12.01% for used cars, according to Experian's Q2 2024 report.
How does my credit score affect my auto loan rate?
Your credit score significantly impacts your rate, with super-prime borrowers (781+ score) receiving rates as low as 5.25% for new cars, while deep subprime borrowers may face rates over 15%.
Can I get a better rate by refinancing my auto loan?
Yes, refinancing can lead to better rates, especially if your credit score has improved or market rates have decreased since your original loan.
Final Thoughts
Understanding average car loan rates is crucial for making informed financing decisions. While these averages provide a helpful benchmark, your specific rate will depend on various personal factors. To ensure you're getting the best deal, always shop around and consider using tools like Kudos to maximize your rewards and savings.
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Editorial Disclosure: Opinions expressed here are those of Kudos alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
