Question 1

How is my monthly car payment calculated?

Accepted Answer

Your monthly payment is determined by three factors: the loan principal (vehicle price minus down payment), the annual interest rate (APR), and the loan term in months. The calculation uses the standard loan amortization formula. Longer terms mean lower monthly payments but more total interest paid. Shorter terms mean higher monthly payments but less total interest.

Question 2

What credit score do I need for the best auto loan rates?

Accepted Answer

Super-prime borrowers (750+) typically get the lowest rates, often below 5% APR for new cars. Prime borrowers (700–749) see rates around 6–9%. Subprime borrowers (580–669) may face rates of 10–18% or higher. Checking your credit report before shopping and improving your score even by 20–30 points can save thousands over a 5-year loan.

Question 3

Should I finance through the dealership or a bank/CU?

Accepted Answer

Dealership financing often comes with manufacturer incentives (0% APR promotions, cashback offers) that can be very competitive. However, banks and credit unions may offer better rates for borrowers with strong credit. Always compare the dealer's "buy rate" against pre-approved rates from your bank or credit union. Never accept financing at the first offer without negotiating.

Question 4

How much should I put down on a car?

Accepted Answer

A 20% down payment is ideal to avoid being upside-down on your loan (owing more than the car is worth). New cars depreciate 20–30% in the first year. A larger down payment also means lower monthly payments and less total interest. Aim for at least 10–20% down, and if you have a trade-in, make sure its value is accurately assessed.

Question 5

What is the difference between new and used car financing?

Accepted Answer

New car loans typically offer lower interest rates (often 2–5 percentage points lower) and longer terms up to 84 months. Used car loans have higher rates but the car costs significantly less. A rule of thumb: keep your total car debt (including insurance, gas, maintenance) under 10–15% of your gross monthly income.

Credit Tier	Score	New Car APR	Used Car APR	Monthly ($30K)
Excellent Credit	750+	4.2% – 5.7%	4.9% – 6.8%	$547
Good Credit	700-749	5.6% – 7.2%	6.7% – 8.9%	$573
Fair Credit	650-699	7.7% – 10.2%	9.2% – 12.5%	$617
Average Credit	600-649	10.2% – 13.5%	12.1% – 16%	$665
Below Average Credit	550-599	13.5% – 17%	16% – 20%	$725
Poor Credit	300-549	17% – 23.5%	19.5% – 27.5%	$802

Credit Tier	Score	New Car APR	Used Car APR	Monthly ($30K)
Excellent Credit	750+	4.2% – 5.7%	4.9% – 6.8%	$547
Good Credit	700-749	5.6% – 7.2%	6.7% – 8.9%	$573
Fair Credit	650-699	7.7% – 10.2%	9.2% – 12.5%	$617
Average Credit	600-649	10.2% – 13.5%	12.1% – 16%	$665
Below Average Credit	550-599	13.5% – 17%	16% – 20%	$725
Poor Credit	300-549	17% – 23.5%	19.5% – 27.5%	$802

Auto Loan Rates for Poor Credit (300-549)

Total Interest on a $30,000 Loan (60 months)

How to get a better auto loan rate

Compare all credit score tiers

Other credit score tiers

Calculate Your Auto Loan Payment