What are interest rates for car loans if I have good credit?

I have a credit score of 795 and a credit history spanning more than 10 years. I had a car loan in the past, but I paid it off about five years ago. Since I haven’t shopped around in half a decade, what are interest rates for car loans if I have good credit?

Answer
Wow! A 795 credit score is something you should feel proud of! And more good news: your credit score will translate to a lower interest rate on your car loan.
Based solely on your credit score, the average interest rate for a new car is 2.34% as of 2021.
While a 795 credit score will qualify you for superprime rates, or the lowest rates possible, other factors also determine your car loan interest rates, including:
  • Income
  • Debt-to-income ratio
  • Loan term
  • Loan amount
When you apply for a loan, a lender analyzes your income to make sure you can afford the loan. Building upon this idea, they also look at your debt-to-income ratio or the amount of your monthly debt payments compared to your monthly income. The industry-standard rate is 43%, so you’re in the clear if you’re below this amount.
The length of your loan term also affects your rate. The longer your loan term, the higher the interest rate and vice-versa. A higher loan amount can also increase the interest rate you pay, as lenders perceive this as a higher risk.
Here’s an example that puts all of these factors together. In November 2021, a 60-month interest rate for a $25,000 car loan is 3.88% for someone with your credit score; a 48-month interest rate is 3.87% based on industry averages.
However, interest rates can vary depending on your lender. This makes shopping around crucial to getting the best rate. Make sure to put every type of lender on your radar, as some may offer special rates for new customers or promotional rates periodically throughout the year.
Since you’re financing the car, remember that lenders will also require full coverage car insurance. To save the most money possible, compare rates with Jerry. Jerry compares personalized rates from the top 50 providers, including Nationwide, Allstate, and Travelers, and delivers the best deals to your phone in minutes for free. The average Jerry driver saves $879 a year on car insurance!
Eric Schad
Answered on Nov 09, 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.
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