Finding the best auto loan rates is about more than just a good credit score.



When financing a new or used car, you want to find the best auto loan rates possible. The difference between a low and high annual percentage rate (APR) can be thousands of dollars by the time you finish paying off your loan.

This article will explain the factors that determine how lenders set APRs and offer tips for finding the lowest auto loan rates. Also read our review of the best auto loan providers to learn about and compare the top lenders in the industry, or visit to start comparing rates right away.


In this article:

What Determines My Auto Loan Rate?

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

However, your credit score isn’t the only determining factor. Employment status, income, and the type of vehicle you purchase also affect rates. Having a steady income stream and purchasing a newer vehicle will result in better auto loan rate offers.



What Is A Good Auto Loan Interest Rate?

Anything below four percent is an excellent auto loan interest rate. However, depending on your circumstances and credit score, finding a rate below four percent may not be possible.

To give you an idea of what rates you can expect based on your credit score, see the tables below. These outline average auto loan rates for new and used cars based on information from a 2020 Experian State of the Auto Finance Market report.

Average Auto Loan Rates For New Car Purchases
Credit Score Average Auto Loan Rate
300 - 500 13.97%
501 - 600 11.33%
601 - 660 7.14%
661 - 780 4.21%
781 - 850 3.24%
Average Auto Loan Rates For Used Car Purchases
Credit Score Average Auto Loan Rate
300 - 500 20.67%
501 - 600 17.78%
601 - 660 11.41%
661 - 780 6.05%
781 - 850 4.08%



Tips For Reducing Your Auto Loan Rates

The best way to reduce your interest rate is to improve your credit score. This can be done by paying your bills on time and keeping your credit card balances low. Paying your monthly payments in full can also help. Outstanding debts or collection notices can impact your credit score, so paying these off will improve your credit.

However, building your credit score can take time and the advice above may not be practical for everyone, especially those with a limited income struggling to pay minimum balances each month.

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

  • Have someone cosign: Many lenders allow you to have another person cosign a loan. A cosigner with strong credit can reduce your interest rates.
  • Buy a new car instead of a used one: While new cars are more expensive, lenders typically offer lower auto loan rates for new car purchases.
  • Place a bigger down payment: A bigger down payment can reduce your interest rate as well as the amount of time it takes to pay off your loan.

You might also consider trying to pay your loan in a shorter time frame. While this may not reduce your loan interest rate, it will mean that you pay off your loan sooner and will have to pay less interest. However, be sure to read your loan contract language carefully. Some lenders charge a prepayment penalty – an extra fee for paying down your auto loan too early.



Where To Find The Best Auto Loan Rates

The table below shows the lenders that offer the lowest auto loan rates. However, just because a loan provider offers low APRs does not mean everyone is eligible for that rate. Loan terms vary by individual, and there is no single best lender for all drivers.



Auto Loan Rate


Credit Score


Annual Income

Loan Amounts
PenFed Credit Union 1.39% 610 Not specified $500 to $100,000
Auto Approve 1.90% 580 $18,000 $7,500 to $150,000
Autopay 1.99% 630 Not specified $2,500 to $100,000
RateGenius 1.99% 550 Not specified $12,000 to $100,000 2.39% 575

$18,000 for refinancing,

$21,000 for purchase loan

$5,000 minimum
Tresl 2.49% 500 Not specified $5,000 to $100,000
Auto Credit Express Varies by lender No minimum credit $18,000 Varies by lender

Drivers with poor credit are unlikely to be eligible for the interest rates noted in the table above. If you have poor credit, try comparing offers from multiple lenders using a site such as This site also specializes in finding loans for borrowers with bad credit, so if you have trouble finding auto loan offers, it’s worth checking.

When comparing loans, be sure to only submit applications to auto lenders that allow you to prequalify without a hard credit check. Hard credit checks can hurt your credit score even further.



How To Apply For An Auto 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 dealerships after your loan is preapproved. Because most loan applications require vehicle information, you may need to have a particular car in mind before applying.

When you apply for a car loan, be sure to have the following information handy, as it may be required to prequalify and will certainly be required before you submit your formal loan application:

  • Personal details 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 not required during prequalification, before you can secure your loan, you may need additional documentation such as your driver's license, pay stubs, and personal references.

If you plan to have someone cosign your loan, that person will also need to supply the information and documents mentioned above.

To start comparing the best auto loan rates from multiple lenders, visit