Is a 5% interest rate good for a car loan?
I'm applying for my first car loan and the lender I'm talking with is offering a 5% interest rate. Is that good for a car loan?
Interest rates and loan terms vary by lender. Your individual financial situation will also play a role in determining which loans you qualify for.
An interest rate of 5% is pretty good for a car loan! Generally, to qualify for that rate, you must have good credit, meaning a score in the range of 700-749. So bravo!
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. Those with credit scores of 750-plus can typically find rates in the 2% to 3% range.
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, as your credit score improves, you can refinance into a lower-interest-rate loan to reduce monthly payments and/or total interest owed.
The Jerry app is a great resource for comparing loan options from multiple lenders. Jerry makes it easy by finding the best lenders at the best rates and delivering the lowest-cost options directly to your phone!
MORE: How to refinance a car
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