The 3 Best States to Finance a Car
Michigan, South Dakota and Wisconsin are three states with some of the lowest average car financing rates across the board.
Written by Allison Stone
Reviewed by Kathleen Flear
Have you thought about taking out an auto loan to secure your dream car? Buying a car is a big investment, and a good
financing
plan can be the key to getting the car you want for the right price. Financing can also help raise your credit score, which in turn can lower rates on other loans, your insurance plan, and more. If you happen to live in one of these three lucky states, you shouldn’t have a problem when it comes to finding a good deal on your financing plan.
If you’re buying a new car, Michigan (2.79% average APR), South Dakota (2.87% average APR) and Wisconsin (3.26% average APR) have the absolute lowest average interest rates when it comes to new car financing.
If you’re looking at a used car, interest rates are slightly higher across the board, but you can still get a good deal in Minnesota (5.92% average APR), Idaho (5.85% average APR) and Utah (5.94% average APR).
Why car loan interest rates are lower in these states
States like Michigan, South Dakota, Wisconsin, Minnesota, Iowa and Utah all have very low financing rates compared to other states when it comes to buying a car according to
Edmunds
. But it's hard to say exactly the reason why because there are so many factors at play. Low cost of living, low demand, high credit scores, low unemployment rates and overall automotive safety can impact the cost of financing rates, car insurance cost and the sticker price on automobiles.
States where financing is expensive like Alaska tend to be places where cars, especially SUVs and trucks, are in high demand. In states like Alaska and Wyoming where navigating mountains, inclimate weather and treacherous terrain come standard, consumers pay 20% more overall just on the base price of a used car because demand is so high.
The climate, amount of sales tax, cost of living, type of terrain and sheer amount of driving that residents have to do can also impact financing rates. It’s overall not too surprising that Midwestern states with relatively flat terrain and mild weather tend to have lower financing rates overall.
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How to get the best deal on car financing
Are you struggling to pay off your current car loan? Refinancing could be the key to save you money on interest rates and reduce your monthly payments.
Sign up with the
Jerry
app to find out how to save on car insurance and get the best deal possible on your auto loan
. Jerry’s loan comparison tool can determine if you’re getting the best deal for the best terms. The AI-based app analyses your current loan and quickly and accurately comparison shops for you, saving you the time and hassle of making those phone calls yourself. Whether or not you decide to refinance, you can always save money on your car insurance plan. Jerry generates multiple quotes from top providers in just 45 seconds. The average Jerry user saves over $800 a year on their car insurance!
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