Refinancing can be a great way to free up cash, but it’s not ideal—and not always possible—for every driver. There are a few situations where refinancing might be a bad idea.

For instance, if you took out loans of any kind in the past few months or declared bankruptcy within the last year, you probably aren’t a good candidate for auto loan refinance right now—you’re better off waiting until your credit score recovers.

Likewise, if you bought your car less than six months ago, or if you’re upside down on your loan, you should wait to refinance. If you can bring your loan right-side up again by making more payments, refinancing will be a better option for you.

Finally, if you’ve previously had a car repossessed or if your car is older than 10 years old, you may not be eligible for any refinance offers. Luckily, there are still ways to reduce your car payments!

How does the type of vehicle I drive affect my auto loan?

While the biggest factors that set your auto loan rate are personal to you—like your credit score and income—the vehicle you’re financing can also affect your approval odds and offer terms.

Here are some ways your vehicle type could affect your auto loan:

New vs. used: While a new car costs more overall to finance, you’ll have access to much lower interest rates than the average rates for used car loans.

Luxury vs. mass-market: It’s probably no surprise that luxury vehicles tend to have higher loan costs. BMW car loans have the highest average APR of any make, while Honda, Toyota, and Jeep tie for the lowest.

High-tech vs. low-tech: The more high-priced tech your vehicle has, the more expensive your loan is likely to be. This is part of what makes new car loans and luxury loans expensive.

Your auto loan depends on more than your credit score—it’s also determined by the car you’re planning to buy. Your future car’s age, make and model, technology, and overall value can all impact your car loan.

Read more about car loans by car make below:

Audi Car Loan

BMW Car Loan

Buick Car Loan

Car insurance and loan expert

Jerry

, the only super app for car owners, can help you find the best loan offers for your car and budget. We’ll also help you figure out what kind of car loan you can afford based on the ride you’ve got your eye on.

Take a look at the table below to see how auto loan options differ from car to car.

Car	Average Auto Loan APR
Acura	8.33
Alfa Romeo	8.40
Aston Martin	8.40
Audi	8.52
Bentley	8.40
Bmw	9.00
Buick	8.43
Cadillac	8.71
Chevrolet	8.43
Chrysler	8.74
Dodge	8.55
Ferrari	8.40
Fiat	8.46
Ford	8.43
Genesis	8.40
Gmc	8.36
Honda	8.20
Hyundai	8.43
Infiniti	8.55
Jaguar	8.40
Jeep	8.20
Kia	8.65
Lamborghini	8.40
Land Rover	8.40
Lexus	8.36
Lincoln	8.52
Lotus	8.40
Maserati	8.40
Mazda	8.40
Mercedes-Benz	8.40
Mini	8.40
Mitsubishi	8.55
Nissan	8.49
Polestar	8.40
Porsche	8.54
Ram	8.43
Rolls-Royce	8.40
Subaru	8.40
Tesla	8.86
Toyota	8.20
Volkswagen	8.43
Volvo	8.24

New car loan vs. used car loan

Here’s the bottom line: you’re likely to have a lower APR and interest rate for a loan on a new car, but the total cost of the loan will be considerably higher.

Why? A new car is worth more, and its value will depreciate quickly over the first few years. In the first year alone, your car will lose about 20% of its value compared to when you first saw it on the lot. Luxury cars, in particular, lose value at astonishing rates—a

BMW 7 Series

can lose 72.6% of its value in the first five years!

The result is that even if your interest rate is low, you’ll be putting a higher monthly payment towards a rapidly depreciating vehicle if you take out an auto loan for a new car.

For a used car, on the other hand, you can expect a higher interest rate—an average of 5.35% for buyers with good credit compared to 3.64% for new car loans. But because the car costs less to buy, your overall loan amount will be smaller and your monthly payments should be lower.

Let’s take an example. Say you’ve got your eye on a

Toyota RAV4

. For a brand-new 2021 RAV4,

Kelley Blue Book

estimates a fair purchase price of $26,242. If you’ve got good credit, you’ll qualify for an interest rate around the national average of 3.64%. Assuming you’re going to make a 20% down payment (about $5,200), you’ll have a monthly payment of $326 for a 72-month loan.

But what if you bought a used car instead? At a purchase price of $21,834 and the average used car interest rate of 5.35%, your monthly payment for a used 2017 RAV4 could be as low as $271! You could even select a 60-month loan term to pay off your debt earlier and still have a lower monthly payment than if you’d gone with the brand-new model.

MORE: 7 things to look for when buying a used car

How new car technology impacts your auto loan

One of the reasons you’ll pay more for a new car loan is that newer models have updated technology that increases their value.

Let’s go back to our RAV4 example. If you bought the new 2021 RAV4, you’d be paying for an impressive suite of cutting-edge safety tech—from adaptive cruise control and emergency braking to drowsy driver detection and multiple forms of lane-keeping assist.

Compare that to the 2017 RAV4, which featured only basic steering assistance, lane departure warnings, and collision mitigation, and it’s clear how much technology can drive up your auto loan costs!

Want to see the real impact of model year on your

car loan

? Check out the graph below to see how APRs and interest rates change from year to year.

“My policy covers two people and four cars: a truck, SUV, convertible, and muscle car.
Jerry
helped me go from paying $308 a month to $125 a month with the same coverage. I’m loving the savings.” —Jocelyn A.

Luxury car loan vs. mass-market car loan

If you’re looking for a loan on a high-end

vehicle

, keep in mind that your desired car’s outsize value will increase your loan costs compared to a more affordable car.

In general, your interest rate and APR will be higher for a luxury car like a BMW than for a mass-market vehicle like a Honda—and you’ll pay more on the loan in the long run. Remember, luxury cars depreciate faster than other cars and their overall purchase price is steeper.

Ready for another example? Let’s compare the cost of an auto loan on a used 2018

BMW 4 Series

vs. a new 2021

Honda Accord

. For the BMW, Kelley Blue Book estimates a fair purchase price of $29,855. Apply a 20% down payment and the average used car interest rate of 5.35%, and your monthly payment for a 72-month loan would be $388.

For the Accord, with a purchase price of $25,040, a $5,000 down payment, and an average new car interest rate of 3.64%, you’re looking at a monthly payment of just $310 for a 72-month loan. On top of that, you’ll pay $1,788 less in interest for the new Honda than for the used BMW!

In other words, you could pay less for a new car loan for a lower-end vehicle than a used car loan on a luxury car. That doesn’t mean you shouldn’t ever take out a

loan

for a luxury vehicle—but keep the elevated loan costs in mind if your heart’s set on one of them.

MORE: BMW car-buying guide

“Insurance companies originally charged me $189 while driving my BMW 300 miles per year. Thanks to
Jerry
, I only pay $56! I’m so happy.” —Ray T.

Finding the right auto loan for your budget

The bottom line: keep your loan budget in mind when deciding what kind of car to buy. If you’re making $50,000 a year (roughly the average for Americans 25 to 34 years old), you can probably afford a car payment of about $550 a month. If you’re able to make a $2,000 down payment, you should be looking for cars in the range of $26,000 to $29,000—think a new

Nissan Altima

or a used

Lexus ES

On the other hand, if you’ve got a higher income and a decent chunk of savings for a large down payment, you can consider more expensive car loans. Perhaps a loan on a new

Audi A4

Porsche Boxster

No matter what your budget looks like,

Jerry

can help you find the right auto loan. Just download the app, enter your information, and Jerry will search for loan offers in seconds to find you the lowest APR and the best monthly payment. When you’re ready to buy, Jerry will help you manage all the paperwork—and shop for a lower rate on car insurance at the same time!