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How do you estimate the interest rate on a car loan?
I’ve been helping my son shop for a new car. We’re working on setting a budget, but I have no idea what his interest rate will be for a new car loan. Is there an easy way to estimate the interest rate on a car loan?
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
It’s nice of you to help your son shop for his new car. I’m sure he appreciates you working on a budget with him! While estimating the interest rate on a
car loan
is difficult,you can use his credit score to get a rough estimate of his interest rate. In general, for a new car loan, you can expect a rate of: - 2.34% for scores between 781 and 850
- 3.48% for scores between 661 and 780
- 6.61% for scores between 601 and 660
- 11.03% for scores between 501 and 600
- 14.59% for scores between 300 and 500
To ensure your son gets the best rate, he should shop around and compare offers from multiple lenders before signing an agreement. Additionally, your son can increase his chances of being offered a lower interest rate by:
- Having a shorter loan term
- Working to improve his credit score
Finally, when setting a budget, don’t forget to leave room for
car insurance
payments. To ensure your son has the coverage he needs and isn’t overpaying, you should recommend Jerry
. Jerry is an insurance comparison app that shops for low prices with over 50 different insurance companies for free. You will get quotes in seconds, can make changes at any time, and if you ever have any questions, agents are just a text away!
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- Gregory R.
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