Why Is APR Important for a Car Loan?
When it comes to auto loan rates, you need to consider the annual percentage rate (APR). The average APR for car loan offers includes interest and all fees that you pay for your car’s financing every year.
The fees you are charged for the auto loan are not included in the interest rate, but it is included in the APR, which is why it reflects the total cost of your loan every year.
Your APR can vary widely and is mostly determined by your credit score. That’s why you should check your credit score before you begin the loan application process — if your credit score is low, you may pay more interest.
For example, if you have an excellent credit score (750+), your average car loan APR should be around 5.07-5.32%. With an average credit score (600-699) you will see average rates between 11.40-11.65%, and if you have a bad credit score (451-599) you could see APR rates of around 16.46-16.71%.
Current auto loan rates from Bank of America are around 2.29% APR for a 60-month auto loan, whereas Chase auto loan rates currently stand at around 4.69% APR for refinancing loans.
Use a car loan calculator to compare different loan offers available to you. You should consider not only your monthly payment but also how much you will be paying for the life of the loan.
Low monthly repayments may seem good, but longer loan periods mean you will pay more interest over time.
💡 Tip: Use our car loan calculator to find the best auto loan rates from lenders in the U.S.