If you’re in the market for a new (or new-to-you) set of wheels with plans to finance it, predicting your interest rate will help you figure out the total costs of the loan. According to recent Experian data, the average interest rate for a new car loan for someone with a 750 credit score is 6.87%. For a used car, the average interest rate is 9.36%.
In general, the higher the interest rate, the more expensive the loan. But what exactly does an interest rate mean for your wallet, and how can you get a lower score? We’ll look at the ins and outs of what factors can impact the interest rate on your auto loan and what you can do to get a better rate.
Key Points
• The average interest rate for new car loans with a 750 credit score is 6.87%.
• Used car loans carry an average interest rate of 9.36% for those with a 750 credit score.
• A 750 credit score qualifies borrowers for better-than-average lending terms.
• Interest rates on car loans are influenced by factors like credit score, lender, loan amount, and loan term.
• Securing better car loan rates can be achieved by improving credit scores and comparing lender offers.
Average Used Car Interest Rate for 750 Credit Score
As we discussed above, drivers with a 750 credit score who are shopping for a used car can expect to pay an average interest rate of 9.36%.
A score of 750 is considered very good and is a sign to lenders that you’re able to successfully manage your credit. This means you could qualify for credit cards and loans and better-than-average lending terms. If your credit score isn’t where you’d like it to be, there are steps you can take to build your credit over time.
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Factors That Affect Auto Loan Interest Rates
Several variables play into the interest rate on your car loan. Let’s look at the most common ones:
Credit Score
Your credit score can play a major role in determining your interest rate. Usually, the higher your credit score, the lower your interest rate. On the flip side, the lower your score, the higher your rate.
Case in point: Based on Experian data, the average interest rate for used-car borrowers with a deep subprime credit score (500 or under) is 21.55%. Meanwhile, the average interest rate for those with super prime credit (781 and above) is 7.13%.
Lender
Whether you go through a bank, credit union, online lender, or dealer, the car loan interest rate you’re offered is influenced in part by where you get your loan. Interest rates vary widely by lender.
Amount Borrowed
When you borrow a large amount of money, you’re considered a greater risk to the lender. That’s because they stand to lose more if you aren’t able to pay back the loan. In turn, a lender may decide to charge a higher interest rate on a larger loan.
Length of the Loan
Typically, the longer the loan term is, the higher the interest rate. That’s because there’s more time for your financial circumstances to shift, and you might have a harder time keeping up with your payments down the line. Conversely, shorter loan terms typically have lower interest rates.
Economic and Market Conditions
Decisions made by the Federal Reserve can influence the lending rates on car loans. The strength of the economy and larger market trends may also play into what interest rates are offered. For instance, the higher the inflation rate, the greater the chances that interest rates rise.
How to Get a Better Auto Loan Interest Rate
There are a number of measures you can take to improve your chances of getting a better auto loan insurance rate.
A good place to start is to focus on building your credit. This means staying on top of bill payments, keeping your credit usage low, and only applying for credit when necessary, among other things.
You can also spend some time improving your credit score. Regular credit score monitoring can help you find ways to boost your score.
Finally, shop around for a lender to see which one can offer you the lowest interest rate.
Recommended: What Is the Starting Credit Score?
How Often Do Auto Loan Rates Change?
Auto loan interest rates change daily and can vary based on the lender, loan amount, market conditions, and other factors. It’s a good idea to check your auto loan rate at different points of your shopping journey. Also, recheck your auto loan rate if you decide to get a new car instead of a used one or change the loan term or amount.
How to Use Average Car Interest Rates
Knowing the average car loan interest rates — and the average interest rate for a car loan with a 750 credit score, if that’s your situation — can help give you an idea of what you’ll pay for your used set of wheels.
To figure out the total cost of the car, factor in the interest rates, fees, routine maintenance and repairs, gas, and registration and title fees. You’ll also want to determine your monthly payments, which include the loan amount, interest rate, and repayment term. That way, you can gauge what’s an affordable amount to cover each month.
Where Are Auto Loan Rates Heading?
While it’s impossible to say where exactly auto loan rates will be in the coming months, they have gradually increased over the past several years. According to Experian, in Q2 of 2024, the average interest rate for new car loans was 6.84%, and 12.01% for used cars. Compare that to Q2 of 2019, when the average interest rate for new car loans was 5.70% and 9.34% for used cars.
However, you may be able to get more for your money if you’re planning to buy a car in the months ahead. The Federal Reserve is expected to lower its benchmark rate multiple times in late 2024 into 2025, which will likely impact borrowing costs for a new car.
Ways to Get a Better Car Loan Rate
Here are some ways you can help improve your odds of receiving favorable car loan rates:
Build Your Credit
Your credit score isn’t the only factor a lender considers when determining your interest rate, but it’s an important one. Generally speaking, the higher your score, the lower your interest rate will be. A good first place to start is to check your credit score to see where you stand.
Some credit card issuers, banks, credit counselors, and spending apps offer free credit scores. They’ll also alert you when your score changes and give you insights into what caused your score to go up or down.
To build up credit, stay on top of your payments, lower your credit utilization, and avoid taking out credit unless absolutely necessary. It’s not an overnight process, but putting in the effort and taking the right steps make for steady progress.
Recommended: What Affects Your Credit Score?
Work With Lenders You Know
If you have an existing loan with a lender, that longstanding relationship could help boost your odds of getting more favorable rates. Sit down with your lender and see what kind of car loan rates you might qualify for.
Shop Around
Different lenders have different lending criteria and a range of available financing. Do your homework and get quotes from several lenders for the same loan amount and repayment term. That way, you can compare your rates side by side.
Opt for a Shorter Loan Term (If Possible)
A shorter loan term poses less risk for lenders and could translate to a lower rate for you. A shorter term can also mean larger monthly payments, so play around with different loan terms to see how much you might owe on your car loan each month in different scenarios.
Save for a Larger Down Payment
Because higher loan amounts mean higher interest rates, see if you can shore up funds for a larger down payment. That can bump down the rate on your auto loan. (A money tracker app can help you set budgets and monitor spending.)
Get a Cosigner
A cosigner with strong credit may help boost your odds of landing a lower interest rate. However, should you fall behind on your payments, the cosigner is on the hook financially to pay what is due. You’ll want to have a discussion about each person’s role and responsibilities beforehand.
The Takeaway
Getting your head around the average used car loan interest rate for a 750 credit score can help you determine how much you’ll be paying on interest on a car should you get financing. In turn, it can give you a stronger handle on the total cost of the car.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
FAQ
How common is an 825 credit score?
According to Experian, 21% of consumers have a credit score between 800 and 850, which is considered exceptional.
How many people have a 900 credit score?
Nobody has a 900 credit score. That’s because standard credit scores range from 300 to 850. That said, FICO created industry-specific FICO® Score models that range between 250 and 900, but these models have very limited use.
How rare is an 800 credit score?
About a quarter of Americans (22%) have a credit score of 800 or higher, which falls within the “Excellent” range.
What is a bad APR for a car?
A bad APR on a car is typically associated with lower credit scores. For instance, the average interest rate for used-car borrowers with a credit score of 500 or under is 21.55%.
What is a good interest rate on a 72-month car loan?
According to MarketWatch, the average interest rate for new cars on a 72-month car loan is 6.86%, and 12.80% for used ones. An interest rate that falls below that is considered better than average.
Is 750 a good credit score to buy a car?
A 750 credit score is in the “Very Good” range and considered above average. With that score, you can usually qualify for more competitive interest rates, larger loan amounts, and more flexible repayment terms.
Photo credits: iStock/Drazen Zigic
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