What is a Good Interest Rate for My Car Loan?

Interest rates are a fee for borrowing money to pay for your vehicle. This fee is a percentage of the ticket price known as “APR” or annual percentage rate. Several factors can influence the rate the bank gives you, including your credit score, the type of car you purchase, and the length of the loan.

So, what is a good interest rate for a car loan? We created a chart showing the best average interest rate depending on your credit score and type of car so you know what to expect when buying a car. You can also talk to our finance team to receive a more personalized APR estimate according to your credit score and car type.

New and Used Car APR

How Do I Get the Best Interest Rate?

For the best interest rate, you’ll first have to plan ahead. Purchasing a vehicle on impulse will typically result in an overpriced car. Take a look at your overall finances and see if there are areas of improvement. The easiest way to ensure a lower interest rate is to have a high credit score, preferably above 700. The higher your credit score, the lower your rate! Start paying off credit cards and make sure you’re paying them on time to increase your score.

The average interest rate on a three-year loan is between 3% and 4.5%, but it will vary depending on your credit score and other factors. The best way to determine if you’re getting a good deal is to get pre-approved and compare your approval interest rates. When finalizing the purchase, you’ll also want to look at the whole deal and not just the interest rate and monthly payment. Pay attention to the details so there are no surprises in the future.

Are Interest Rates Different for Luxury Cars?

A popular question in Wilsonville and Beaverton is, “Do luxury cars have higher interest rates?” When told “yes,” the following question is, “What is a good interest rate for a luxury car loan?” Well first, luxury cars tend to have higher interest rates due to demand, reputation management, and sales volume. With this in mind, a decent interest rate for a luxury vehicle lands between 4% and 5.5%, only one percent higher than a mainstream brand vehicle.

Find the Car of Your Dreams at Mercedes-Benz of Portland

We’re here to help! Don’t hesitate to call if you need additional information about interest rates for the car you’re interested in. We’ll walk you through the process so you have all the information you need to make a comfortable decision that works best for your Vancouver lifestyle. You can use our payment calculator online to get a monthly estimate before you take the leap!