the average car loan interest rate for the US is 4.21% based on 5 years loan term (60 months)
for every customer, the car loan interest rate is based on your credit score and the length of your term loan. so having high credit scores and short-term loans leads to low interest rates.
how is the average car loan interest rate
determined by credit score?
particularly consumer credit scores below 580 are considered
very poor. this type of person always has a high-interest rate on car
loans, the interest rate ranging from 7.5% to 15.24%
then average who have above 660 in credit score, may pay interest rate ranging from 5.31%to 7.02%
for the reason every lender thinks, it is a risky investment who have a low credit score instead of having high credit score. because this type of credit score shows the delayed monthly payments, high level of debt, and your other pending loan extra…
car loan buyer when requesting the car loan applicants show the net worth of a car, cost of a car, insurance, finance income status history of ability to repay the loan amount with interest rate.
The Fair Isaac Corporation FICO credit score by accessing through credit history shows how every credit holding person maintained their credit lines.
car loan interest rate on loan term length
when comes to car loans, short-term loans always carry lower
interest rates when compared to long-term loans. Short-term loans
considered range from 6 months to 36 months.
medium-term loans can be 37 months to 60 months and long-term loans
are more than 60 months There is a lot of difference in paying
amount when you select a different payment option.
for instance, your car loan is 50k $ and the interest rate may be 5%
however, if you select the short-term loan for 36 months.
then you pay $1,498.54 every month, the total interest you pay for the loan is
$3,947.61 and finally you finish the loan at the end of the 36th month $53,947.61.
but if we change the loan amount paying period a little bit, then
see the difference when we pay on a long-term loan. again let us take
the same 50K$ loan amount with a 5% interest rate but pay on 60 month term period.
if you calculate this on your own (or) through a calculator your monthly
payment will be $943.56 and the total interest you pay is $6,613.70 and finally
you finish the loan at the end of the 60th month $56,613.70
you can easily see the difference in the same 5% interest rate with different
term period, understand how your long-term payment affected your initial
loan and interest amount compound.
select the average car loan interest rate with an excellent credit score and short
term when you take a car loan there is no best (or) good interest rate because
anything you pay with interest isn’t good.
so taking a loan with a minimum credit score above 760 can bring you a low-interest rate of 2% to 3%on the other hand paying a car loan in a short amount of
time can reduce your interest payment. when compared to long-term loans.
if you decide to buy any car loans then I consider using our interest calculator below
to find your interest rate also if you have any doubts, then feel free to contact me.