Typical Car Loan Interest Rates

When looking for a car near Plainfield and Danville, it's easy to wonder what the process will be like. Specifically, what are the typical interest rates on car loans?

Andy Mohr Avon Nissan looks at the typical car loan interest rates, so you'll know what to expect when starting the financing process.

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How Your Car Loan Affects Your Interest Rate

When you're shopping for your next car, you'll meet with a finance professional to discuss your options. They'll go over the terms and application process for a car loan.

Whether or not you get approved for a loan is decided by how likely the bank or lender thinks you are able to pay off the loan consistently and in the amount of time discussed in the terms.

The basis of your loan is your credit score. This determines everything from how many months you may be paying to what your interest rate will be.

Typical Car Loan Interest Rates

Car loan terms can run anywhere from 12 to 84 months. The recommended term varies, depending on whether you buy a new or a used car. Obviously, you won't want to be paying off a used car for several years.

According to the national average, if you buy a new car and have a 60-month loan, your interest rate will be around 4.2%. However, this all varies based on your credit score, length of term, and the value of the car you buy.

To get an estimate on what your interest rate and your monthly payments could be, check out our payment calculator and plug in the payment and term that you're looking for.

How to Lower Your Interest 

In terms of your car loan, there's a couple ways to reduce your interest rate that can result in you paying less over the course of your term.

Since one of the main things that goes into your interest rate is the length of your loan, one way to reduce it is to shorten the number of months.

It's true that a longer loan will give you lower monthly payments. However, with a higher interest rate, you could be paying for longer or end up paying more over time than you would throughout a shorter loan.

The best thing you can do to lower your interest rate, though, is improve your credit. This is always recommended because your credit score can impact everything from your auto loan to getting approved to buy a house.

Some ways to improve your credit include paying off outstanding bills, making payments regularly instead of sporadically, and not opening any other lines of credit for a while.

One last thing that may be able to help both your interest rate and your chances of getting approved for a car loan is to have a cosigner with good credit. Having someone with good credit backing you up is an excellent way to show lenders that they can count on you to make good with your auto loan.

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At Andy Mohr Avon Nissan, we have a team of expert finance professionals who can help you navigate every step of the application process. They'll go over typical car loan interest rates, as well as what kind of loans you qualify for.

Both your approval and the interest on your loan are determined by your credit score. Our financing team always shops around with local lenders in Plainfield and Danville to get the best rates for you.

To learn more about typical interest rates on car loans, visit Andy Mohr Avon Nissan or get started and apply for financing online.