Why is my car loan interest rate so high?

Is there a reason that my car loan interest rate is so high? I feel like I see advertisements for 0% APR all the time, but I can’t find an interest rate below 6%.

Interest rates can be tricky—especially when it comes to car loans. But one reason your car loan interest rate is so high could be your credit score. Lenders base your interest rate on many factors, like existing debt and income, but your credit score often has a bigger impact.
Luckily, you can still use these tips to secure a lower interest rate and better terms:
  • Make a large down payment: Lenders will often offer better interest rates to borrowers who can pay off a significant chunk of their principal upfront.
  • Extend or shorten the term: On average, long-term loans have lower monthly payments, but you’ll end up paying more in total. The opposite is true for short-term loans.
  • Find a cosigner: Cosigners essentially agree to take responsibility for a loan if the borrower is unable to pay. As a result, applicants with cosigners can typically secure much better loans than those without.
  • Try a credit union: Credit unions are nonprofits that provide financial support to the local community. They’ll typically offer loans with better terms and lower interest rates than alternative lenders.
To make your monthly payments more manageable, try refinancing with Jerry! A licensed broker, the Jerry app helps you compare multiple quotes from lenders to find a rate that works for you. On average, car owners pay $85 less every month by refinancing their auto loan. See if refinancing can help save you money with Jerry.
Liz Jenson
Answered on Jan 12, 2022

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