AutoBlog has a great breakdown on where financing rates are coming in for new and used cars. While we’re focused on the Car Inspection Score, you should always be adding time for research to finding great rates.
Current Market Rates
Dealer Rates: Bank of America is reporting 5.39% APR for new cars and 5.59% APR for used cars.
Note: These are highly favorable rates intended for borrowers with excellent credit; most buyers will not qualify for these specific figures.
Average Rates: The broader market average is significantly higher, at approximately 6.78% APR for new cars and 12.01% APR for used cars.
Key Factors Influencing Your Rate
Credit Score: This is the most significant factor. Super-prime borrowers see much lower rates (around 5.25% for new cars), while subprime borrowers can face rates exceeding 18% for used vehicles.
New vs. Used: Used cars generally carry higher interest rates (often 0.5% to 1.5% higher than new cars) because lenders account for higher depreciation risks.
Market Trends: Rates are currently holding steady rather than falling, as they remain closely tied to Federal Reserve decisions and bond market performance.
Tips for Getting a Better Deal
Shop Around: Comparing offers from multiple lenders can save borrowers an average of $2,346.
Get Pre-Approved: Obtaining pre-approval provides a "rate ceiling" that you can use as leverage when negotiating at a dealership.
Use Tools: Run your specific numbers through a loan calculator before walking into a showroom to ensure you have a clear understanding of your budget.
Thanks for reading everybody!
-Paul