When shopping for a vehicle, most people will take out an auto loan, including those drivers around New Holland, Lancaster, and Lititz, Pennsylvania, shopping for a pre-owned car.
The team at New Holland Auto Group knows how important it is to have information about the interest rate you can expect when you purchase a pre-owned car. That's why we've put together this page. Learn about average used car interest rates, what affects your interest rate, and how to get a lower one!
Average Used Car Interest Rates
Quite a few things affect interest rates; however, one of the biggest factors is your credit score. When you get a loan, the bank attaches an interest rate which you pay off along with your vehicle.
So, depending on your credit score, your used car interest rate might change. For people with credit scores over 780, the interest rate will typically be around 3.61%. If you have a credit score between 661 and 780, your interest rate will be about 5.38%.
People with credit scores from 600 to 660 can expect an interest rate of 9.8%. Anything below that, and you can expect an interest rate of 15.9% to 19.9%.
That being said, on average, the used car interest rate is at about 8.21%.
What Affects Your Interest Rate?
A few different factors are taken into account when determining your interest rate. The three primary factors are credit score, current debt, and income.
Income determines your ability to pay back the loan, debt indicates how much money you already owe to other sources, and credit score tells lenders how much risk they might take when extending the loan.
Arguably, the biggest factor is your credit score. The higher the credit score, the more likely lenders think you'll pay back the loan. If you're unsure about your current credit score, you can check it yourself at the three credit reporting bureaus: Equifax, Experian, and TransUnion.
How to Get a Lower Interest Rate
Getting a lower interest rate is possible. There are a few things you can do to help make that happen.
One of the biggest things is to improve your credit score. There are a few different ways to improve your credit score, including making on-time payments for bills, lowering your debt-to-income ratio, and even being added as an authorized user on a credit card. You can also acquire a free copy of your credit report to review-and if there are any errors, report them. When they're corrected, it can raise your credit score.
Another way is to keep your loan short and small. If you can keep the loan term short and the amount small, you'll qualify for a lower rate. That's because you can pay it off more quickly than a big loan.