What is a Good Interest Rate For a Car Loan?

Buying a car involves working out financial decisions, which can be a headache for Bakersfield folks. One question we often hear at the Delano Chevrolet GMC finance center is: What is a good interest rate for a car loan? Ultimately, what’s considered a good interest rate depends on the market and if it’s a new or used vehicle. By figuring out what is a good interest rate for a car loan, you can save thousands of dollars in the process! 

Interest Rates Defined 

Before we go into what is a good interest rate for a car loan, let’s define interest rates. The interest rate is the fee you pay the lender back when you borrow money with a car loan. The lender essentially is the car’s owner until you pay in full. To know how to calculate the interest rate on a car loan, you’ll need to know these components:

• Principal Amount: The total sum you borrow to purchase the car with your loan.
• Loan Term: The amount of time it takes for you to repay the loan. The interest rate varies on what kind of loan term you choose. (i.e. short-term loans come with higher interest payments with less interest at the end.)
• Repayment Amount and Schedule: How often you pay and how much you pay factor into your interest amount and principal amount. 

Average Interest Rate for a Car Loan 

So, what is a good interest rate for a car loan? As of the fourth quarter of 2023, the overall average auto loan interest rate was 7.18% for new cars and 11.93% for used cars. It’s helpful to know that new cars have overall lower interest rates than used options. The interest rate for your car loan also depends on your credit. The APR rises the lower your credit score is. Our financial team near Porterville can help you get pre-qualified and view your credit score to get a better idea of what you’ll have to pay. 

Get An Excellent Interest Rate with Delano Chevrolet GMC!

Figuring out what a good interest rate is for a car loan doesn’t need to be daunting. If you have poor or no credit, work with our financial team in Delano to help get your next dream car. We offer competitive financing no other dealership near Tulare can provide!