What is a Good Rate for a Used Car Loan?

70% of private party vehicle purchases are financed. If you’re in that 70%, getting the best auto loan rate can save you thousands of dollars.

When you buy a car, whether it’s new or used, getting the best interest rate for a used car loan is critical to save you money over the long run.

There are many different auto financing options, which means loan rates can vary, making it necessary to do your research to be sure you’re getting the best rate possible.

How Important is Your Credit Score?

Your credit score is the main factor that determines your interest rate, so it’s best to check your credit score before you apply for auto financing.

Your credit score is based on your credit history. If you have good credit history by making loan and credit card payments on time, your credit score is higher.

Auto loan lenders look at your credit history to see how well you’ve paid debts in the past. With a higher credit score you can expect lower interest rates on your car loan.

If you have bad credit, you may be able to quickly improve your score before getting a loan.

Sites like AnnualCreditReport.com and NerdWallet.com provide free credit reports. Knowing your credit score prepares you to research the best interest rates for buying a car.

If your credit score is below 600, check to see what credit card balances you can pay off or pay down before applying for a used car loan. Also, dispute inaccurate charges on your credit report and clean up collection accounts. These actions may increase your credit score and get you a better interest rate on a used car loan.
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What is a Good Interest Rate on a Used Car Loan?

Interest rates, which are set by the Federal Reserve, fluctuate within current economic conditions. Interest rates on car loans haven’t fluctuated as much as credit cards and mortgage rates have in recent years, which is good for car buyers.

You want the best rate for a used car loan, as it can save you significant money over the term of the loan. You should shop around to find a lender with the most favorable terms available to you based on your credit score.

For example: you have a credit score of 680, you should expect an interest rate on a used car loan to be about 5.58% (which hasn’t changed much over the past decade).

The age and mileage of the car also affect the interest rate on your car loan. This is something to keep in mind when searching for a used car. Also, be sure to ask the lender about rates on newer cars with fewer miles if the interest rate seems higher than you expected for your credit score.

Does Pre-Approval Affect My Loan Rate?

After you’ve checked your credit score and decided what price range you can afford, it’s a good idea to get pre-approved for an auto loan.

During the pre-approval application process you’ll be able to find out how much you can afford based on your income, credit score, and current interest rates. You’ll also find out what vehicle loan rate you can expect.

Based on these factors, you’ll have an easier time choosing the kind of car that’s ideal for you to buy. If at first you had considered buying a nearly-new BMW, your pre-approval amount may may convince you to start looking at gently-used Fords.

Auto insurance is required in most states in order to purchase a vehicle. When you already know what kind of car you’ll be purchasing, then you can begin to compare auto insurance quotes. Taking the time to choose the right car insurance can help you save money, and you’ll be ready when it comes time to sign papers.

Having all of this information makes your car buying experience easier, because you can make better decisions by being prepared.

Concerned that the pre-approval process might take so long that you miss out on the best loan rates? Not to worry: the PrivateAuto pre-approval process is fast. (Plus, car interest rates don’t fluctuate as much as credit card or mortgage rates, for example.)

You can get pre-approved right in our mobile app to get the best rate for a used car loan.

Then your buyer profile will show as having “verified funds,” which makes you stand out from other potential car buyers and makes it more likely that your offer will be accepted.
What is a Good Rate for a Used Car Loan?

How Do Loan Terms Affect Rates?

Usually a loan term to finance a used car is 36-48 months in a normal market. Recent loan terms of 60-72 months have been more common for auto loans, as buyers seek to reduce monthly payments.

With shorter loan terms, the monthly payment is higher, but the interest rate is lower.

Longer auto loan terms often have higher interest rates. With higher interest rates spread over a longer term, monthly loan payments are less, but you end up paying more for the car in the long run.

Using a used car loan calculator can show how loan terms affect your payments.

Be sure to find out all available finance options from the lender before you agree to a payment plan that’s higher than what you can comfortably afford.

Even if you start out with a longer term loan, and you make on-time payments, you can get an auto refinance loan with a better interest rate after paying your current loan down for about 24 months.

What Interest Rate Discounts Can I Get On My Car Loan?

When you speak with your auto loan lender, be sure to ask what rate discounts are available for a used car loan. Lenders may give you a discount on the loan rate for any or all of the following:

Automatic payments with your checking account
Membership: if you belong to a credit union, have a checking account, or credit card
Excellent credit score
Larger down-payment: the less you borrow, the less your interest rate may be
Just ask: sometimes just asking an auto finance lender is all it takes to get a reduced rate
Negotiate lower interest rates after a year of making payments on time
What is a Good Rate for a Used Car Loan?

Where Can I Search for a Used Car?

Browsing used vehicles for sale is easy! PrivateAuto does everything for used car buyers all on one platform, giving you the best customer experience possible.

PrivateAuto is not only a site for secure private party car buying, but also offers in-app financing via third-party lenders who can help you get the best interest rates for a used car loan.

Search for the perfect car, make an offer, schedule a test drive, secure financing, pay the seller, and get the keys to your new-to-you ride–all in one place.

Every step of the process takes the risk out of buying a used car and makes car buying easy.

Experience the PrivateAuto Advantage

Avoid scams, keep personal information private, and guarantee funds with PrivateAuto. Fast, convenient car transactions. Get started today.
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Used Car Loan FAQ

Is 5% a good interest rate for a used car?

Yes, 5% is a good interest rate on a used car loan, and is better than average, in the current economic conditions. Interest rates can range from 3-20% on used car loans.

What is a good interest rate for a used car for 72 months?

Can you negotiate the interest rate on a used car?

How can I get a low car loan rate?

What is the smartest way to finance a car?

How can I negotiate a better interest rate on a car loan?

Do dealerships control interest rates?

Do age and mileage affect used car loans?

Are There Missed Payment Terms on Car Loans?

How Do I Know What Car I Can Afford?

What If I Have Bad Credit?

What Lender Fees Should I Expect With a Car Loan?

What If the Lender is Part of a Preferred Network?