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What Is a standard car loan interest rate in 2021?
I want to get the best interest rate possible for my new car loan. What’s a realistic expectation?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Investigating interest rates for a
car loan
is a smart way to save money! As you may already know, interest rates change regularly, so knowing what to expect enables you to get the best rate possible.For new cars, your 2021 rate may mirror these averages based on credit score:
- 300 to 500: 14% to 20%
- 501 to 600: 11% to 17%
- 601 to 660: 6% to 15%
- 661 to 780: 3% to 9%
- 781 and up: 2% to 6%
Generally speaking, a lender bases your car loan interest rate on three major aspects:
- Your income
- Credit score
- Debt-to-income ratio, or how much you pay on debt each month compared to your monthly pre-tax income
If you don’t have a ton of debt and you have a steady income that can support the loan, your credit score affects your interest rate the most. As a result, car loan interest rates are typically a product of credit score.
Keep in mind that where you go to get the loan also has a profound impact on your rate. When you want to finance a car, make sure that you shop around to get the best rate possible. Some places to start looking include:
- Banks
- Credit unions
- Online lenders or third-party lenders
- Dealerships
While credit unions typically offer the best rates, many other lenders have promotional rates or special deals, so expanding your search to include all of these lenders can help.
Since you’re financing a
new car
, the lender will almost certainly require full coverage car insurance, so budget appropriately.Just like you would with car loan rates, shop around for car insurance to get the best rate possible. The easiest and most straightforward way to conduct your search is with the
Jerry
app. Sign up with Jerry in minutes to compare quotes from the top 50 providers, including Nationwide, Allstate, and Travelers. The average Jerry driver saves $879 a year on car insurance!Congrats again on your purchase!
View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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