Car loan interest rates aren’t set randomly — lenders price them based on a combination of your credit score, the loan term, whether the vehicle is new or used, and current market conditions. Generally, shorter loan terms and higher credit scores come with lower rates, while longer terms and used vehicles tend to carry higher APRs since they represent more risk to the lender. This is also why the rate you see advertised by a dealership is often a starting point, not the rate you’ll actually qualify for. Plugging different rate scenarios into our car loan calculator is the easiest way to see how even a one or two percentage point difference changes your total cost.
If you’re unsure where you stand, it helps to understand the direct relationship between your credit profile and the number a lender offers, which we cover in detail in how your credit score affects your car loan rate. It’s also worth comparing rates across different types of lenders rather than accepting the first offer, since dealership financing and outside lenders can price the same loan very differently — our guide on dealer financing vs. bank auto loans walks through how to compare them side by side before signing anything.