How to find the best auto loan rates (2021)

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

This article explains the factors that determine how lenders set APRs and offers tips for finding the lowest auto loan rates. Also read our review of the best auto credit suppliers to learn more and compare the best 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 determines your auto loan rates is your credit score. The higher your score, the lower your APR will be. The best rates are reserved for those with a credit score above 800, but depending on Equifax, any score above 670 makes you a “low risk borrower” and opens the door to lower rates.

However, your credit score is not the only determining factor. Employment status, income, and the type of vehicle you buy also affect rates. Having a steady stream of income and buying a newer vehicle will result in better auto loan rate deals.

What is a good interest rate for an auto loan?

Anything less than four percent is a great interest rate for auto loans. However, depending on your situation and your credit score, it may not be possible to find a rate lower than four percent.

To give you an idea of ​​the rates you can expect based on your credit score, check out the tables below. These describe the 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 Lowering Your Auto Loan Rates

The best way to lower your interest rate is to improve your credit score. This can be done by paying your bills on time and keeping your credit card balance low. Paying your monthly installments in full can also help. Unpaid debts or collection notices can impact your credit rating, so paying them off will improve your credit.

However, building your credit score can be time consuming, and the tips above may not be practical for everyone, especially those with limited income who struggle to pay minimum balances each month.

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

  • Get someone to co-sign: Many lenders allow you to have someone else co-sign a loan. A co-signer with strong credit can lower your interest rates.
  • Buying a new car instead of a used one: While new cars are more expensive, lenders generally offer lower auto loan rates for new car purchases.
  • Pay a larger deposit: A larger down payment can lower your interest rate and reduce the time it takes to pay off your loan.

You can also consider trying to pay off your loan on a shorter timeframe. While this may not lower the interest rate on your loan, it does mean that you pay off your loan sooner and will have to pay less interest. However, be sure to read the language of your loan agreement carefully. Some lenders charge a prepayment penalty, which is an additional fee if you pay off your car loan too early.

Where to find the best auto loan rates

The table below shows the lenders who offer the lowest auto loan rates. However, just because a loan provider offers a low APR does not mean that everyone is eligible for this rate. Loan terms vary among individuals and there is no one best lender for all drivers.


The lowest

Auto loan rate


Credit score


Annual revenue

Loan amounts
PenFed Credit Union 1.39% 610 Unspecified $ 500 to $ 100,000
Automatically approve 1.90% 580 $ 18,000 $ 7,500 to $ 150,000
Automatic payment 1.99% 630 Unspecified $ 2,500 to $ 100,000
Genius Tariff 1.99% 550 Unspecified $ 12,000 to $ 100,000 2.39% 575

$ 18,000 for refinancing,

$ 21,000 for a purchase loan

$ 5,000 minimum
Tresl 2.49% 500 Unspecified $ 5,000 to $ 100,000
Auto Express Credit Varies depending on the lender No minimum credit $ 18,000 Varies depending on the lender

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

When comparing loans, be sure to only submit applications to auto lenders that allow you to pre-qualify without a credit check. Strict credit checks can hurt your credit score even more.

How to apply for a car 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 dealers after your loan has been pre-approved. Since most loan applications require vehicle information, you may need to think about a specific car before you apply.

When applying for a car loan, make sure you have the following information handy, as it may be required for prequalification and will definitely be needed before submitting your formal loan application:

  • Personal data 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 this is not required during prequalification, before you can get your loan, you may need additional documents such as your driver’s license, pay stubs, and personal references.

If you plan to have someone co-sign your loan, that person will also need to provide the information and documents mentioned above.

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

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