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Why is my interest rate so high on my car loan despite my excellent credit?

I keep seeing that people with an okay credit score are getting approved for four to five percent interest rates, and yet I could only get approved for 12% despite having nearly perfect credit. Why is my interest rate so high?

avatar
Johnny Puckett · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
While lenders do look at your credit score, they also take into account various other factors when determining your
car loan
, such as: 
  • Monthly gross income
  • Employment history
  • Debt-to-income ratio
  • Credit history
Any of these factors can cause the lender to consider you high-risk and charge you accordingly.
Pro tip: If you’re unhappy with your car loan, consider refinancing for a lower rate after making on-time payments for six to 12 months.
MORE:
How to get out of an upside-down car loan
Car LoansCredit Score
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