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:
- 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!