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How do I figure out my car loan interest rate?
What should I be looking at to figure out my car loan interest rate? I want to know how much I should be paying before I take out a loan because I don’t want to get scammed, but I’m not sure how interest rates are calculated.
Liz Jenson · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
It’s wise to plan! To figure out your car loan interest rate, you’ll need to figure out your credit score. Car loan interest rates are largely based on your credit score, so a higher credit score will mean a lower APR on your loan. Right now, the average interest rates for someone purchasing a new car with a good credit score is between 2% and 4%.
For a more accurate estimate, you’ll also need to choose your repayment period, or the amount of time you expect to take to repay your loan. Typically, car loans with 72- or 80-month repayment periods will have a much higher interest rate than loans with 60-month repayment periods or shorter. However, a shorter repayment period means a higher monthly bill, so make sure that you can still make payments on time if you opt for a shorter term on your loan.
You can estimate your APR using an online calculator, which is the easiest way to figure out your interest rate.
While you’re taking the time to research your car loan options, why not take a minute to shop for better car insurance rates, too? It’s quick and easy when you use the
Jerry
app! Just download the app and answer a few questions to see your policy options in a comprehensive list. When you find a quote you like, Jerry can help you cancel your old policy and sign up.MORE: What is APR and how is it calculated?
View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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