How to Get the Best Auto Loan Rates

3 min read
woman and man sitting in front seat of car smiling

In the market for a new or used car? If you’re planning to finance that purchase, you’re probably wondering how to get the best auto loan rate possible. After all, your car loan rate directly impacts your monthly payments and how much money you’ll spend on interest.

But what is a “good” annual percentage rate (APR) for a car loan? Recently, average new car loan interest rates have ranged from about 2 to 5 percent, depending on the lender, term (length of loan), type of vehicle (new or used), down payment, credit score, and other credit and vehicle characteristics. Add to that potential financing fees or interest markup, and your rate can really do a number on your wallet.

Tips on Getting the Best Auto Loan Rate

Fortunately, there are some tried and true tips for getting the lowest auto loan rates. Here are five ways to reduce your rate:

1. Take care of your credit

Generally speaking, the higher your credit score is, the lower your rate will be. Here are a few credit score hacks you can take to get your credit in better shape before taking out a car loan:

  • Check your credit report. Look for errors and contact the credit agency about any errors

  • Pay your bills on time. If you have trouble remembering, consider setting up automatic payments for the monthly minimum amount – you can always make an additional monthly payment if you’re feeling flush.

  • Pay down debt fast. Credit utilization, or credit card balance vs. credit limit, makes up a large portion of your credit score. A general rule of thumb is keeping your credit utilization ratio below 30 percent.

2. Know the difference between APR and interest rate

An auto loan interest rate is the cost to borrow money, expressed as an annual percentage (e.g., 3 percent per year). It’s pretty easy to calculate how a simple interest rate might impact your monthly payments and total interest cost using a loan interest calculator.

APR, on the other hand, is not so straightforward. It reflects the annual interest rate plus some of the fees the lender is charging you, so it’s a more complete picture of your cost of borrowing. For that reason, and because APR can often be higher than simple interest rate, when considering apr vs interest rates, it’s best to use APR when comparing rates on auto loans.

3. Closely examine dealer financing options

A dealership can be a great place to buy a car, but it’s usually not the best place to get a car loan. Auto dealers often mark up the interest rate, charging as much as 3% more than the APR you might have qualified for with another lender. Do your homework beforehand by comparing rates at banks, credit unions and online lenders, then get pre-approved and show up at the dealer with your conditional commitment letter in hand.

4. Make a down payment

Buying a car doesn’t usually require a down payment, but making a down payment can be a good idea. One rule of thumb is to put 10 percent down on a used car and 20 percent down on a new car, but the ideal down payment is really the one you can afford. Generally, a larger down payment may reduce your interest rate. As a bonus, a higher down payment translates to a lower total interest cost, since you’ve reduced the amount you need to borrow. If you don’t already have a down payment saved up, it may be worth doing before pulling the trigger on your new car. You can also weigh your options between leasing vs buying a car before making your final decision.

5. Know your refinancing options

If you already took out a loan but didn’t get the best car loan rate, don’t despair—the rate you got when you took out the loan might not be the rate you’re stuck with forever. LendingClub makes it easy and fast for eligible consumers to refinance a car loan online at a lower interest rate. You can check your rate in less than a minute without impacting your credit score.

How do you lower your car payment?

If you’re more concerned about getting a low car payment vs. getting the best car loan interest rate, refinancing can help you with that, too. When you refinance a car loan through Lending Club, you could be eligible to extend the term (or repayment period) and lower your monthly payments, giving you some extra cash in your pocket and helping you grow your savings. Check your rate now to see if refinancing can make those payments easier to cover.

Check Your Rate

You May Also Like

Related Resource Center
Some small businesses seem to thrive no matter what the economy is doing. What’s their secret? Here are a few business ideas to consider and tips to help you bake some resiliency into your venture.
Aug 15, 2023
6 min read
Asian man wearing blue apron looking out shop doorway with sign showing open for business in window
Before taking out a loan, it’s important to understand how the loan repayment will work and how much your monthly payments will be. With amortized loans—which includes many consumer loans—each payment gets split into an interest payment and principal payment.
Aug 21, 2021
4 min read
man considers amortization methods
Most small businesses need to obtain financing at some point, but there can be an overwhelming number of options out there. We know as a business owner you’re busy and don’t have a lot of time to spare.
Sep 17, 2017
5 min read
Group of people in a conference room discussing business finance
We understand figuring out what things cost and how to pay can be overwhelming. Don’t let that confusion or uncertainty get in the way of moving forward with fertility treatment. We’ve helped countless individuals and couples budget to take the first step towards parenthood.
May 13, 2017
2 min read
Family-IVF-Treatment
You’ve got plans to take your business to the next level and shore up company financials, and to do that you need an infusion of cash. How well you prepare to seek this funding — and how carefully you evaluate potential lenders — will have a major impact on your chances for success.
Apr 29, 2017
5 min read
Man in business attire with glasses staring at camera
Related Impact
From groceries and diapers to Halloween costumes for pets, nearly 60% of American consumers prefer to shop online for everyday items that make life more convenient, comfortable, and enjoyable. And with rising prices showing no signs of stopping anytime soon, we’re pleased to introduce StackitTM from LendingClub Bank—a new browser extension that automatically finds and rewards eligible members with coupons and cash back for extra savings at more than 15,000 favorite online retailers.
Nov 13, 2022
2 min read
blog header stackit 765x430 v1-1
Even in today’s low-yield, high-inflation environment, it’s essential to keep a certain amount of money in an easy-to-access checking or savings account for things like daily household and emergency expenses, or to meet short-term financial goals.
Oct 2, 2022
5 min read
LendingClub Rewards Checking Nationally Certified as Trusted, Afforda
Since 2007, LendingClub has been on a mission to deliver a world-class experience to all our members. This month we took a moment to reflect on the more than four million members who have chosen LendingClub as their partner to help them reach their financial goals.
Apr 19, 2022
2 min read
Illustration of large number 4 and letter M made up of colorful, tiny illustrations of ethnically diverse people
In March 2022, we hosted our first quarterly webinar where we celebrated our one-year anniversary as a digital marketplace bank. 
Mar 6, 2022
less than a minute read
Blog-post
LendingClub completed the acquisition of Radius Bank in February 2021. At that time, in addition to the direct-to-consumer deposit business, we inherited a fintech partner program, and several lending businesses. As we reach the one-year anniversary of the acquisition, and in conjunction with the conclusion of a strategic review of our business operations, we have made the decision to discontinue certain businesses that don’t fit our mission.  
Jan 2, 2022
2 min read
Man in blue button up shirt and glasses smiling
Related FAQ's
We apply any one-time payments directly to your principal balance, reducing the total cost of financing.
Jun 7, 2023
less than a minute read
You can partially or fully prepay your loan at any time with absolutely no prepayment penalty or fee.
Jun 7, 2023
less than a minute read
Need to change the bank account you linked when you applied? You can make that change directly from your Account Summary.
Jun 7, 2023
less than a minute read
How Do I Make Changes to My Payment Date?
Jun 7, 2023
less than a minute read
If you're ready to pay off your loan, congratulations! That's a big achievement. Once you pay off your loan, you won’t owe any additional interest and your monthly payments will end.
Jun 7, 2023
less than a minute read
Related Glossary
{noun} A type of credit that allows the borrower to make charges and payments against a set borrowing limit, paying interest only on outstanding balances.
Sep 6, 2023
4 min read
{noun} The amount of unpaid interest that has accumulated as of a specific date, either on a loan or an interest-bearing account or investment. 
Mar 21, 2023
4 min read
{noun} The total annual cost to borrow money, including fees, expressed as a percentage.
Mar 21, 2023
3 min read
A debt that is written off as a loss because the financial institution or creditor believes it is no longer collectible due to a substantial period of nonpayment.
Feb 7, 2023
3 min read
{noun} An interest rate that remains the same for a set time, usually for the life of the loan.
Feb 4, 2023
3 min read
Change Your Money, Change Your Life
Join our monthly newsletter for tools, tips, and insights to improve your financial health.
  

LendingClub Bank and its affiliates (collectively, "LendingClub") do not offer legal, financial, or other professional advice. The content on this page is for informational or advertising purposes only and is not a substitute for individualized professional advice. LendingClub is not affiliated with or making any representation as to the company(ies), services, and/or products referenced. LendingClub is not responsible for the content of third-party website(s), and links to those sites should not be viewed as an endorsement. By clicking links to third-party website(s), users are leaving LendingClub’s website. LendingClub does not represent any third party, including any website user, who enters into a transaction as a result of visiting a third-party website. Privacy and security policies of third-party websites may differ from those of the LendingClub website.

Savings are not guaranteed and depend upon various factors, including but not limited to interest rates, fees, and loan term length.

A representative example of payment terms for a Personal Loan is as follows: a borrower receives a loan of $19,854 for a term of 36 months, with an interest rate of 10.29% and a 6.00% origination fee of $1,191, for an APR of 14.60%. In this example, the borrower will receive $18,663 and will make 36 monthly payments of $643. Loan amounts range from $1,000 to $40,000 and loan term lengths range from 24 months to 60 months. Some amounts, rates, and term lengths may be unavailable in certain states. 

For Personal Loans, APR ranges from 9.57% to 35.99% and origination fee ranges from 3.00% to 8.00% of the loan amount. APRs and origination fees are determined at the time of application. Lowest APR is available to borrowers with excellent credit. Advertised rates and fees are valid as of July 11, 2023 and are subject to change without notice. 

Checking a rate through us generates a soft credit inquiry on a person’s credit report, which is visible only to that person. A hard credit inquiry, which is visible to that person and others, and which may affect that person’s credit score, only appears on the person’s credit report if and when a loan is issued to the person. Credit eligibility is not guaranteed. APR and other credit terms depend upon credit score and other key financing characteristics, including but not limited to the amount financed, loan term length, and credit usage and history.  

Unless otherwise specified, all credit and deposit products are provided by LendingClub Bank, N.A., Member FDIC, Equal Housing Lender (“LendingClub Bank”), a wholly-owned subsidiary of LendingClub Corporation, NMLS ID 167439. Credit products are subject to credit approval and may be subject to sufficient investor commitment. ​Deposit accounts are subject to approval. Only deposit products are FDIC insured.

“LendingClub” and the “LC” symbol are trademarks of LendingClub Bank.

© 2023 LendingClub Bank. All rights reserved.