Having a credit score of 660 or above helps qualify you for lower interest rates when applying for a car loan in Michigan. It is best to aim for a loan term of 60 months or less.

Getting a car loan can be a confusing process, which is why the car insurance app, Jerry, has created a guide with the information you need to secure the best loan possible.

Below, you’ll learn how you can get a car loan, what you should look for in a lender, and how your credit score will affect the interest rates for a car loan in Michigan.

How to get a car loan in Michigan

Instead of paying for the entire car, most people will apply for a loan from a bank, credit union, or dealership. The loan is then paid back in installments over an agreed timeframe. This is a great system, as the buyer can drive the car right away without having to save up for the entire balance before they can make the purchase.

Below is the basic process you can expect when getting a loan in Michigan:

Usually a down payment of 10% or more of the car’s value will be required.
You will then negotiate with the lender to settle the interest rate and loan term.
The loan principal (the total amount to be paid back) will be paid by you over the loan term.
There will also be a monthly interest, calculated by your annual percentage rate (APR).

The lender will determine the loan amount to offer based on the type of car you plan to buy, the loan term, and your credit score.

In the table below, you can see what your potential APR and monthly payments for a car loan in Michigan would look like.

Credit Rating

Car Make	Average Annual Interest Rate	Average Monthly Payment
ACURA	8.62	$363
ALFA ROMEO	8.69	$363
ASTON MARTIN	8.69	$363
AUDI	8.84	$364
BENTLEY	8.69	$363
BMW	9.39	$369
BUICK	8.73	$364
CADILLAC	9.05	$366
CHEVROLET	8.73	$364
CHRYSLER	9.09	$366
DODGE	8.88	$365
FERRARI	8.69	$363
FIAT	8.77	$364
FORD	8.73	$364
GENESIS	8.69	$363
GMC	8.66	$363
HONDA	8.47	$361
HYUNDAI	8.73	$364
INFINITI	8.88	$365
JEEP	8.47	$361
Jaguar	8.69	$363
KIA	8.98	$366
LAMBORGHINI	8.69	$363
LEXUS	8.66	$363
LINCOLN	8.84	$364
LOTUS	8.69	$363
Land Rover	8.69	$363
MERCEDES-BENZ	8.69	$363
MINI	8.69	$363
MITSUBISHI	8.87	$365
Maserati	8.69	$363
Mazda	8.69	$363
NISSAN	8.8	$364
POLESTAR	8.69	$363
PORSCHE	8.87	$365
RAM	8.73	$364
ROLLS-ROYCE	8.69	$363
Subaru	8.69	$363
TESLA	9.23	$368
TOYOTA	8.47	$361
VOLKSWAGEN	8.73	$364
VOLVO	8.51	$362

Here are a few tips for you to keep in mind when you start looking for a car loan in Michigan.

Check your credit

Always check your credit score before you buy a car. This will let you know what interest rates you could qualify for. A credit score of 660 will help you get approved for better interest rates. A credit score that is above average (700 or higher) might qualify you for an even better interest rate of 3% or lower.

Get an estimate of your average interest rate and monthly payment based on your credit rating using the table below.

Credit Rating

Loan Terms	Average Annual Interest Rate	Average Monthly Payment
24	11.85	$701
36	8.97	$473
48	8.42	$365
60	8.32	$303
72	8.67	$264

Compare lenders

Researching your potential lenders is an important step. Rather than accepting the first loan offer you get, take your time to get a few more offers so you can get the best loan possible.

Try to get offers from at least three lenders to see the range of loan amounts you can get. A low interest rate is important, but choosing a lender that will most likely approve your loan is just as crucial. Another overlooked aspect is whether a lender has good customer service. You want to have pleasant interactions throughout your loan term!

Choose your loan term

The loan term is the length of time you will make regular payments to pay off the loan balance. Depending on your preference, it could be paid monthly or bi-weekly. The average car loan term in Michigan can range from 60 to 72 months, but you can negotiate the loan term to accommodate your budget.

For lower monthly payments, you could get a longer loan term. The downside is that you will also be paying more interest overall, which bumps up your total cost. It would be ideal to get the shortest affordable loan term for your budget and aim for 60 months or less.

Refer to the table below to see how the loan term in Michigan can change your APR and monthly payment.

Credit Rating	Average Annual Interest Rate	Average Monthly Payment
Fair	17.39	$420
Good	8.6	$362
Very Good	5.14	$341
Excellent	3.9	$333

MORE: Should you get a 72-month car loan?

Get preapproved

Getting preapproved for a car loan before you start shopping for a car will give you an advantage since you’ll know what budget size you have to work with. This lets you set a goal for what prices to negotiate for. Since you know your budget, you can negotiate more confidently for the best price for your car.

Can you get a car loan in Michigan for a used car?

It is possible to get a car loan to finance a used car in Michigan. However, this may not be advantageous as there are more restrictions, such as:

Interest rates can be up to 8% higher for a used car loan.
If the lender has a car age limit, your application can be rejected for older cars.
If the lender has a minimum loan requirement, small loans would be rejected. Fortunately, you can consider getting a loan from a credit union instead.

The age of the car you purchase can impact your car loan in Michigan, as seen below:

Car Make

Car Year	Average Annual Interest Rate	Average Monthly Payment
2021	7.87	$306
2020	8.31	$310
2019	8.46	$310
2018	8.27	$309
2017	8.48	$310
2016	8.65	$311
2015	8.85	$313
2014	8.82	$382
2013	8.9	$382
2012	9.89	$514
2011	9.89	$514
2010	9.89	$514

MORE: How to determine the retail value of your used car

Michigan car loan calculator

Once you’re comfortable with the process of getting a car loan, the loan term to aim for, and the car you want to buy, you can calculate the total expense. Jerry’s car loan calculator can help you get an estimate of your car loan payments in Michigan. The amount is based on the interest rates you can get, the loan amount, the loan term, and the car model.

The specific amount you qualify for may differ since many aspects are negotiable, such as the additional fees or potential penalties. The terms that you and your lender agree on can also affect the loan amount. The goal of this tool is to give you an idea of what amounts to expect so you are prepared to negotiate a better loan.

Car Make

Credit Rating

Loan Terms

Loan Amount

Average Annual Interest Rate	Average Monthly Payment
8.76	$364

MORE: How to calculate total interest paid on a car loan

How to find affordable car insurance in Michigan

Since you’re getting a new car, you will also need to look for a new car insurance policy that meets Michigan’s minimum coverage requirements. Additional coverage is always advised for better protection. Gathering quotes is a tedious process but Jerry can help find competitive quotes from more than 50 top insurance providers without the long forms or haggling.

Not only will Jerry handle all the paperwork and help with cancellations, but it will also preemptively search for new quotes before your new policy expires. This is to ensure you always get the best rates.

The average Jerry user has easily found $887 in savings on car insurance every year through the app.

“Jerry was quick and provided me with various choices. I found the policy I wanted in 10 minutes and was able to drive off with my new car!” —Emiya S.

FAQs

What credit score is needed to buy a car in Michigan?

A credit score of 660 or above is required to get approved for a loan with a lower interest rate in Michigan. On rare occasions, some lenders would approve a loan for lower credit scores with a higher interest rate.

Will a bank give me a loan for a used car?

Many banks will set a minimum loan requirement. As a result, a loan application that doesn’t meet the minimum will likely be rejected. You can consider applying for a small loan at a credit union instead.