Is 7% APR on a car loan too high for a car that's over 10 years old?

I'm shopping for an older used car. My credit union pre-approved me for a loan, but the interest rate is over 7%. I'm not sure if getting a loan is the best idea. Is 7% APR too high on a car loan for an older car?

Answer
“Depending on the loan term, 7% APR on a used car loan isn’t all that bad.
Because a car that’s over 10 years old is considered high-risk, you’re unlikely to find a much lower rate. Even so, you should shop around to ensure you’re still getting the best rate.
If the current offer is the best one, try to avoid a long-term loan. A high-interest rate and long term can put you upside down on a car loan or cause you to pay an excessive amount of interest.
If possible, a term that is 60 months or shorter is ideal with a 7% interest rate.
Keep in mind that your lender is likely to ask you to get full coverage on your financed vehicle, even though it’s older. Full coverage can be pricey, but it doesn’t have to break the bank. Try using the free Jerry app to compare rates from the top 50 companies and get the best deals delivered to your phone in minutes.”
avatar
Eric Schad
Answered on Aug 10, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
thumb-up

Did this answer help you?

Ask us a question by email and we will respond within a few days.
thumb-up

Have a different question?

You can meet us at our office and discuss the details of your question.

Read advice from car experts at Jerry

Easiest way to compare and buy car insurance

√
No long forms
√
No spam or unwanted phone calls
√
Quotes from top insurance companies
Find insurance savings — it's 100% free