Good news for drivers with excellent credit: The average auto loan interest rate for consumers with an 800 credit score is 5.25% for a new car and 7.13% for a used car, according to Experian’s 2024 State of the Automotive Finance Market report.
Consumers with high credit scores tend to secure the best loan rates and terms for any lending products, including auto loans. But many different factors impact the interest rate a borrower receives when they apply for a car loan.
Let’s dive into what auto loan interest rates you can expect, how they differ among lenders, and some steps you can take to get the best deal.
Key Points
• Individuals with an 800 credit score can secure an average interest rate of 5.25% for new cars and 7.13% for used cars.
• A high credit score allows borrowers to access favorable interest rates and loan terms, which can lower overall borrowing costs.
• The lender choice, loan amount, down payment, and loan term length can all influence the interest rate received.
• Economic conditions and the Federal Reserve’s rate decisions can also impact auto loan rates.
• Regularly monitoring and improving your credit score can help you secure better rates.
Average Used Car Interest Rate for 800 Credit Score
As mentioned, the average interest rate for a car loan with an 800 credit score is going to be 7.13% for a used car. Experian’s 2024 report found that borrowers with a credit score of 781 or higher access those rates on average.
Having a higher credit score generally leads to getting your hands on the best loan rates and terms. If a borrower has a credit score of 800, that means they have good credit habits that lenders like to see. If you’re just starting your credit journey, there are ways to help build your credit over time.
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Factors That Affect Auto Loan Interest Rates
When you apply for an auto loan, lenders take a few factors into consideration when determining the loan amount, interest rate, and loan terms. Here’s a closer look.
Credit Score
Lenders evaluate your credit score to get an idea of how likely you are to make your loan payments on time. Having a high credit score shows that you know how to manage credit responsibly, and as a result, you can often secure a better interest rate. Borrowers with lower credit scores can make lenders nervous, so they’re often charged higher interest rates to balance out the risk.
What affects your credit score? Make consistent on-time payments, avoid hard credit inquiries, and keep your credit utilization ratio low to improve your score over time.
Lender
Whom you choose to borrow money from can impact the interest rate you receive. In general, you’re more likely to secure a better deal by getting a loan from a bank, credit union, or online lender than from a dealership — even if you have a lower credit score.
Amount Borrowed
The amount you borrow can impact your auto loan interest rate. A larger down payment helps lower your loan-to-value (LTV) ratio, which can lead to better loan rates and terms. A money tracker app can help you track and manage your finances.
Length of the Loan
If you can choose the loan term, you may be tempted to pick a long one. After all, the longer your loan term is, the lower your monthly payments will be. While lower payments can help you manage your monthly budget, you’ll end up paying more interest over the life of your loan. Longer loan terms are also often associated with higher interest rates, since there’s an increased risk a borrower defaults or pays off the loan early. You can use a spending app to create a budget that accommodates larger loan payments.
Economic and Market Conditions
Some factors that impact loan rates are out of your control. For example, current economic and market conditions affect the Fed rate, which in turn influences auto loan rates. Lenders also take certain market conditions into consideration, like vehicle demand and how well their current borrowers are repaying their loans on time.
How to Get a Better Auto Loan Interest Rate
If you want to spend as little as possible when you borrow money to finance a car purchase, there are a few ways you can help secure a lower interest rate.
To start, spend some time improving your credit score. Borrowers with a high credit score tend to access better interest rates because they pose less risk to the lender. Regular credit score monitoring can help you find ways to continuously improve your score.
It takes time to build credit, but making a large down payment can help immediately. You can also shop around for a lender to see who can offer you the lowest interest rate.
Recommended: What Is the Starting Credit Score?
How Often Do Auto Loan Rates Change?
Interest rates on lending products like auto loans change daily, so check the current loan rates before you walk onto a car lot. It’s also a good idea to get prequalified or preapproved ahead of time. That way, you have a better idea of what you can afford.
How to Use Average Car Interest Rates
It’s important to remember that average rates are just a helpful guidepost, not a guarantee. Understanding what the average car interest rate looks like can help you evaluate if you’re getting a good deal when shopping around for a car loan.
Where Are Auto Loan Rates Heading?
Unfortunately, there is no crystal ball that can help you predict exactly what auto loan rates will look like in the future. However, making an educated guess is possible. Thanks to recent interest rate cuts by the Federal Reserve, some economists believe we should continue to see auto loan rates drop in late 2024 into 2025.
Ways to Get a Better Car Loan Rate
If you’re looking for ways to get a better car loan rate, consider taking these steps:
• Buy a more affordable car. Expensive cars come with more expensive car loans. If you can’t make a large down payment on a pricey car, look for a more affordable option.
• Shop around. Apply for a car loan with a few different lenders to get an idea of which one can offer you the best terms at the right price.
• Pay off your revolving credit. One quick way to get a credit score boost is to lower your credit utilization ratio by paying off any revolving forms of credit like a credit card or home equity line of credit.
• Check your credit report for errors. You can check your credit score and report without paying. Once a year, check for errors that are harming your credit report and dispute any that you believe should be removed.
Recommended: How Often Does Your Credit Score Update?
The Takeaway
In 2024, the average used car loan interest rate for an 800 credit score is 5.25% for a new car and 7.13% for a used car. That said, these are just averages. The car you choose to buy, your down payment amount, your credit score, and the lender you work with can all impact what your actual interest rate ends up being. It’s a good idea to spend some time working on improving your credit score and to shop around for the right lender to avoid overspending on interest.
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
What car loan interest rate can I get with an 800 credit score?
You can expect to find an average interest rate of 5.25% if you have an 800 credit score and are applying for a new car loan. Buying a used car? You can expect to encounter an average interest rate of 7.13%.
Is 800 a good credit score to buy a car?
Having a credit score of 800 is considered excellent. As a result, you can expect to access favorable auto loan rates and terms.
What is the average interest rate on a 72-month car loan?
It can be difficult to gauge exactly what a 72-month car loan interest rate will be, but it is safe to say it will cost more than a shorter-term loan. Choosing a 72-month car loan will result in lower monthly payments, but also in paying more interest.
Is 7% interest rate high for a used car?
A 7.00% interest rate for a used car is about average for borrowers with good credit.
What is a bad APR for a car?
As of Q3 2024, the average 60-month new car loan APR is 8.40%, according to the Federal Reserve Board. If you are offered an interest rate higher than that amount, you may want to work on improving your credit score before accepting a loan offer.
Is 5.90% APR good for a 72 month car loan?
If you can manage to secure a 5.90% APR for a 72-month car loan, you likely have a great credit score and a large down payment on your side.
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