What is a Good Interest Rate for a Car Loan?

Car Finance Paperwork
If you live near Jacksonville and want to purchase a new or pre-owned vehicle and need a car loan, you’re probably wondering, “What is a good interest rate for a car loan?” Hodges Mazda can help! The average car loan interest rate varies depending on your credit score and many other factors. Below is the current average interest rate for a new and used vehicle based on your credit score. Of course, it also fluctuates by the lender. When you’re ready to begin the financing process, contact our finance specialists at Hodges Mazda.

Average Credit Score

Annual Percentage Rate Used Car Loan

Annual Percentage Rate New Car Loan
780 or better

3.4%

3.10%
661-780

5.42%

4.00%
601-660

6.49%

10.0%
501-600

10.65%

12.5%
500 or less

13.50%

15.32%

What Factors Impact the APR on Your Car Loan?

Now that you no longer have to ask, “What is a good car loan rate?”, are you curious about what is the average interest rate on a car loan and what exactly influences it? The average car loan interest rate fluctuates based on the Prime rate set at the federal level. In terms of your personal interest rate, it varies depending on your worthiness of credit. Some things that can cause a low credit score (and a higher interest rate) are factors like being late on loan payments, having too high debt in relation to your income, or having debts in collection around Saint Augustine. These things could indicate that a borrower has trouble managing their personal finances and meeting their obligations.

How Length and Type of Loan Impacts Your Interest Rate

The type of loan you get also influences your car loan interest rate. Used car loan interest rates are typically higher than new car interest rates for several reasons. The first reason is that the vehicle has begun to depreciate, and that decreases its overall value. Also, the older the car, the more difficult it is to qualify for financing. Lastly, when the dealership takes in a pre-owned vehicle on trade, they know they will likely have to spend money on it for repairs on top of the money they already paid to acquire it.

The term length of the auto loan also impacts the interest rate. The longer the car loan term, the higher the interest rate, but the trade-off is lower monthly payments. A higher car loan interest rate helps the lender get more of their money back sooner if they default on the loan.

Apply for financing at Hodges Mazda Today

Now that you understand what a good car loan rate is, let the finance team at Hodges Mazda help you through each step of the financing process. We are committed to treating you with respect and will patiently answer all of your questions. Visit our dealership near Orange park to see our extensive inventory of pre-owned and new Mazda vehicles, and let’s go for a test drive out to Lakeside. What are you waiting for? Contact us today!

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Hodges Mazda 30.175621, -81.547378.