An interest rate of 5% is reasonably good when it comes to car loans
. Factors that influence interest rates and loan terms are:
Your individual financial situation
Generally, to qualify for a 5% interest rate, you must have good credit history—meaning a score in the range of 700-749. However, if you were to wait to buy a car and work on improving your credit score, you may be able to get an even better deal.
Pro tip: Buyers with credit scores upwards of 750+ can typically find rates on car loans as low as 2% to 3%!
Ultimately, the lower the interest rate, the better it is for you and your wallet. But even if your initial car loan does not have the greatest APR possible, you may refinance your loan into a lower-interest-rate loan as your credit improves to reduce monthly payments and your total interest owed.