What is a Good Interest Rate on a Car Loan?

Signing car financing paperwork

While the sticker price can tell you how much a vehicle is worth, the interest rate on an auto loan can make a big difference in how much you pay. So, what is a good interest rate on a car loan? You’ll generally find interest rates ranging between 3.17% and 13.76% depending on how good your credit is. Since you’ll want to pick up a new Mercedes-Benz with the best loan package, you’ll also want a good understanding of what the average interest is on a car loan. We’ve put together a quick and easy guide to fill you in.

What is the Average Interest Rate on a Car Loan?

This handy chart shows average new and used car loan rates based on APR (Annual Percentage Rate) and credit scores.

Average Credit Score for New Car Annual Percentage Rate Average Credit Score for Used Car Annual Percentage Rate
781-850 3.17% 781-850 3.8%
661-780 4.03% 661-780 5.48%
601-660 6.79% 601-660 10.1%
501-600 10.98% 501-600 16.27%
300-500 13.76% 300-500 19.32%

To help you better understand your place in the chart, let’s look at a common example: A three-year car loan has an average interest rate of between 3% to 4.5%. However, your credit score can swing the needle in either direction. That’s why it’s best to compare car loans and interest rates by looking at various lenders across San Diego and Escondido.

What is a Good Car Loan Rate and How Do You Get It?

Any San Marcos car shopper looking to earn the best interest rate should start planning ahead. Start by getting a copy of your credit history so you know exactly where your score stands. The higher the score, the lower the interest rate, and the less you’ll pay. Per the Fair Credit Reporting Act, you are entitled to one free copy of your credit report each year from Experian, Equifax, and TransUnion – the three major credit bureaus.

You should sort through the credit reports to make sure everything is in order, then you should take a look at the chart above to find out where you stand. If the interest rate you’re offered doesn’t match the chart, feel free to negotiate.

Toy car on a calculator

Learn More About Car Finance With Mercedes-Benz of Escondido

Now you’re aware of “what is a good interest rate on a car loan?” and “what is the average interest rate on a car loan?”, you can reach out to the Mercedes-Benz of Escondido finance team for any further assistance. You can even apply for financing from the comfort of your own home using our quick and convenient online form! No matter your credit score, our team will work hard to help you secure the best interest rate possible and we can help you decide if you should finance through us or another lender. Contact us today to start a conversation.

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