What Is A Good Interest Rate On A Used Car?

If you are in the market for a new or used car, it may prove useful to understand what an average interest rate on a used car should be. Interest rates are given as an annual percentage rate or APR. They are also dependent on several factors, such as income-to-debt ratio, along with your credit score. Because of this, new and used car loan rates vary; however, it’s best to know how to find better-than-average interest rates.

At Toyota Direct’s used car dealership near Columbus, Ohio, we have a lot of experience in helping people to find good interest rates. Therefore, we would like to assist you by providing a list below of how and what to look for when searching for good interest rates. 

1. Averages Based On Credit Score Or Financial Situation

Suppose you find a used truck near Columbus, Ohio, that you are interested in buying. While at the dealership, you sit down with the staff to discuss used car loan rates. Unfortunately, after this discussion, you have to walk away because the rates are too high for your budget. Several factors could have contributed to this high rate, such as credit score and income-to-debt ratio. For this reason, it is important to understand the interest rate averages based on these factors. 

If you know the averages, you can then determine whether or not a rate is good or too high. Below, you can see the average rates according to Experian Information Solutions1 for used cars based on credit score brackets:

• Deeper Subprime (300-500): 19.87%
• Subprime (501-600): 15.96%
• Nonprime (601-660): 9.8%
• Prime (661-780): 5.38%
• Superprime (781-850): 3.61%

These are averages; therefore, you should still aim to look for rates that are better than these numbers.

2. Shop Around With Dealerships And Lenders

As mentioned above, you should strive to find interest rates that are better than the average. Hence, you should shop around with different dealerships. If you keep your options open, you will likely find good rates near you. You can also visit Toyota Direct’s used car dealership near Columbus, Ohio, to find great interest rates that beat the averages. 

3. Look Out For Deals And Specials

While looking for good interest rates, something you should look out for is any deals or specials being offered by dealerships. There are many different deals available, including discounts on used car loan rates. Toyota Direct’s used car dealership near Columbus, Ohio, always has something great available when it comes to deals and offers. 

4. Save For A Down Payment Or Make A Trade-In

When seeking auto financing, there are a few essential things you can do to lower your interest rates below the average. The first thing you can do is make a down payment, which should ideally be twenty percent of the vehicle’s cost. You can also trade in an old car, which acts similarly to a down payment, lowering your interest rates. Some dealerships, including Toyota Direct’s Columbus used car dealer, have trade-in incentives as well, in which they offer lower interest rates or money off your purchase.

5. Consider A Co-Signer

Whether you are looking for good interest rates on used cars near Columbus, Ohio, or anywhere else, the final thing to consider that will lower your interest rates is a co-signer. A co-signer will help to reduce your interest rate by providing the lender with more financial security. This financial security comes from the fact that a co-signer’s responsibility is to take over loan payments if they are missed. Since this is a big responsibility, you should ideally find someone that you trust to be your co-signer, such as a close friend or family member. 

Source: 

1. Bradley, S. (2022, March 25). Average car loan interest rates by credit score. NerdWallet. Retrieved May 17, 2022, from https://www.nerdwallet.com/article/loans/auto-loans/average-car-loan-interest-rates-by-credit-score 

Tags: auto financing, columbus used car dealers, used car dealership Columbus Ohio, used car loan rates, used cars columbus ohio, used trucks columbus ohio
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