Buying a "new to you" car is an exciting time, but it can get stressful when you begin looking into financing. While buying a used car from a private party can save you thousands of dollars, you should familiarize yourself with used car loan rates and the used car loan process so you don't wind up spending more money in the long run.

There are many sources for financing a used car, but used car loan rates can vary widely. Therefore, it's important to do your research and make sure you're getting the best rate possible for the life of the auto loan.

The First Step to Getting the Best Used Car Loan Rate

Your credit score will determine your interest rate, and if you check your credit score before you apply for a loan, you may have time to improve your score before applying for a loan.

Sites like and provide free credit reports. Once you know your credit score you'll be better prepared to begin researching used car loan interest rates. If your credit score is below 600 try to pay off or pay down the balance on credit cards before applying for a used car loan. Also, submit disputes for inaccurate reports and clean up collection accounts.

Top Questions For Used Car Loans and Loan Rates

Once you know your credit score and you're ready to apply for a loan, prepare all of your questions in advance. Then, use the list below as you research lenders and rates.

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How Long Does the Pre-approval Process Take?

Used car loan rates fluctuate, and it's essential to know how long it will take a lender to approve your loan. In 2021, rate fluctuations worked in the buyer's favor; most auto loan rates dropped as the year went on. Used car loan rates are influenced by the Fed's benchmark interest rate, the federal funds rate. Although rates aren't expected to jump anytime soon, it's still important to know that a slow loan pre-approval process won't stand between you, your "new to you" car, and the best rate possible.

Minimum Loan Amounts with Age and Mileage Limits

For most auto loans, the car shouldn't be older than ten years or have more than 100,000 miles on it. These restrictions will vary from lender to lender, but it's essential to know the limits up front to guide your car search. The age and mileage may affect the rate, too, so be sure to ask about rates on a newer car with fewer miles if the rate seems high.

Loan Term

You usually finance a car with a loan term of 36-48 months in a normal market. In the pandemic market, it's common for auto loans to have a period of 60 or 72 months to accommodate higher prices. The loan term will make a significant impact on your monthly payment; be sure to know your options before you agree to a payment plan that seems higher than you can comfortably afford.

Lender Fees

While lender fees don't usually affect the used car loan interest rate, they should still play a role in your lender comparisons. Most loans have sales tax fees, a documentation fee, and a registration fee. If there are additional fees, double-check to ensure it's a standard fee for every lender. If it's not, negotiate.

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Interest Rate Discounts

Don't forget to ask about interest rate discounts! Lenders may give you a discount on the interest rate for any or all of the following reasons:

  • Automatic payments with your checking account
  • Membership - If you belong to a credit union or have a checking account or credit card, you may qualify for a discounted rate on your auto loan
  • Excellent credit score

Missed Payment Terms

No one ever intends to miss a car payment, but it can happen. Ask the lender about missed payment terms and find out if it can affect your interest rate. Late payments will affect your credit score, and you will get a late fee, but a higher interest rate penalty can increase your costs for the life of the loan.

Preferred Network?

Is the auto loan or rate tied to a preferred auto dealer network? It's important to know this information up front; if you want to buy a car from a private seller, you'll want to remove lenders that require a preferred network from your list of potential lenders.

Searching For a Used Car

Searching for a used car has never been easier! With sites like PrivateAuto, do everything you need to do on one platform. Search for the car, make an offer, schedule the test drive, finalize financing, pay the seller, and get the keys. You won't have to worry about missing a step or risk dealing with flakey sellers who are unreliable or don't hold a title to the car.