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How do you calculate car loan interest rates?
What’s the best way to calculate car loan interest rates before you apply? I’d like to get a better idea of what I should expect before applying for a loan. To me, that means understanding how much I should expect to pay in interest.
Joshua Levy · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Most of the time, it’s difficult to calculate exactly what your interest rate will be before you apply because it depends on your individual circumstances. Each lender has a different algorithm for determining interest rates. They often consider many factors, like:
- Credit score
- Loan amount
- Income
- Existing debts
- Loan term
That said, you can generally get a ballpark idea of your interest rate by learning about interest rates for other borrowers with similar credit. Here are the average 60-month car loan interest rates from 2021 based on credit scores:
- 720-850—3.6%
- 690-719—4.95%
- 660-689—7.02%
- 620-659—9.72%
- 590-619—14.06%
- 500-589—15.24%
Hopefully, this can help you understand what you may pay in interest. If the number makes you nervous, remember that there are other ways to
save on car expenses
, like with the Jerry
app. Jerry helps users compare personalized quotes from over 50 top providers like Progressive and Nationwide for free. The average user saves $879 a year on car insurance.
View full answer
- Gregory R.
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