What Are Current Average Car Loan Interest Rates and APRs for 2023?

New and used car buyers often want to know - what are the average 2023 car loan interest rates and APRs they can expect to see? Interest rates impact the monthly payment and total loan cost. This guide examines current auto loan APRs, factors that influence rates, and how to secure the best financing in 2023.

What is the Current Average New Car Loan APR in 2023?

For new cars in 2023, average APRs by credit score are:

800+ credit score (prime) - 3% to 5% APR
700-799 credit score (prime) - 4% to 6% APR
620-699 credit score (non-prime) - 6% to 10% APR
600-619 credit score (subprime) - 10% to 14% APR
Under 600 credit score (deep subprime) - 14% to 20% APR

Shop prime lenders to access interest rates below 5% for new cars based on a strong 700+ credit score. Those under 640 may pay double digit rates from subprime lenders.

What is the Current Average Used Car Loan APR in 2023?

For used car purchases in 2023, average APRs are:

800+ credit score (prime) - 4% to 7% APR
700-799 credit score (prime) - 5% to 8% APR
620-699 credit score (non-prime) - 8% to 12% APR
600-619 credit score (subprime) - 12% to 16% APR
Under 600 credit score (deep subprime) - 16% to 24% APR

Used car interest rates run 1-2% higher than new currently. Strong credit still nets rates under 8% from prime lenders. Subprime buyers pay significantly more.

Prime Car Loan Rates vs Subprime Rates in 2023

Prime borrowers (700+ credit) generally see:

New car rates from 3% to 7% APR
Used car rates from 4% to 8% APR

Subprime borrowers (under 640 credit) generally see:

New car rates from 8% to 20% APR
Used car rates from 10% to 24% APR

Having prime credit saves thousands over the auto loan term by qualifying better rates. Subprime terms carry expensive risk premiums.

How Does Credit Score Impact Auto Loan Interest Rates?

Credit score influence on APR:

800+ scores offer the lowest rates due to representing ultra prime borrowers.
700-749 scores see minor impacts, with rates 1% higher than 800+.
640-699 scores classify as non-prime with rates 2-4% above prime.
Under 640 are subprime with significant rate increases. Scores below 600 see drastic jumps.

Improving credit from good to excellent can save 1% or more, while falling from prime to subprime can double rates.

Average Auto Loan Term Lengths

Typical loan terms and impact on APR:

36 months - Lower rates but higher monthly payment.
48 months - Allows lower payment with slight rate increase.
60 months - Average term length with moderate rates.
72 months - Lowest payment but higher rates from risk.
84 months - Riskiest term with highest rates but lowest payment.

Aim for 60 months or less to keep rates down. Budget appropriately to avoid very long terms unless necessary.

Do Auto Loan Rates Vary by State?

2023 auto loan rates don’t vary significantly by state, but factors in specific locations can have some influence:

State maximum interest rate caps on loans impact rate ceilings. But most are above 15%.
Regional economic factors like unemployment may account for small variations.
Credit score distributions and financial trends in local areas move rates.
Promotions and incentives from lenders in a given state can create minor variances.

But any state-level differences amount to less than 1% typically. National lender rates are broadly similar.

Down Payment Percentage Effect on Interest Rates

Typical down payment tiers and impact on APR:

0-4% down - Highest rates; risky for lender
5-9% down - Slight rate improvement
10-19% down - Lower rates in prime territory
20%+ down - Maximum rate incentive; best terms

Larger down payments signal lessened risk and commitment from borrowers. This earns lower interest rates from lenders.

How Auto Loan Rates Have Changed

2022 average new car rate - 5.2% APR
2021 average new car rate - 4.1% APR

Rates rose over 1% due to:

Federal interest rate hikes
High inflation
Tighter lending restrictions
Supply chain constraints

Expect rates above 5% for the near term until inflation cools in 2023-2024.

Pre-Approval for Lower Rates

Getting pre-approved for financing helps:

Lock in current rates before future hikes
Compare multiple lender rates
Focus searches only on approved loan amount
Negotiate from a position of strength at the dealership

Don’t wait - secure favorable rates now before further increases.

FAQs

How much does auto loan interest vary from month to month?

Very little variance monthly. Market-wide shifts lead to adjustments every few months in 0.25 to 0.5% increments based on macro factors.

Which lenders offer the lowest interest rates right now?

Online lenders, credit unions, and community banks often offer the most competitive rates versus large national banks.

How much does the length of the loan change interest rates?

Going from a 60 month term up to 72 or 84 months can increase rates around 0.5% typically.

What’s better - longer term with lower payment or higher rate?

Go for the shortest term you can afford the monthly payment on. Lower rates save thousands over the life of the loan.

How much can improving my credit score reduce rates?

Each 100 point credit score increase reduces rates by around 1.5% - Excellent credit unlocks huge savings.

Key Takeaways on 2023 Auto Loan Rates and APRs

Credit score heavily influences loan rates - prime borrowers get far lower APRs
2023 new car rates range from 3% for prime buyers up to 20% for subprime
Used cars are 1-2% higher than new currently
20%+ down payments maximize rate incentives
Pre-approval locks in current rates before future hikes
Improving credit by 100+ points before applying generates big savings

Understanding current rate trends helps set expectations and budget accurately as you take out a 2023 auto loan. Position yourself to access the best rates for your situation before buying.

https://wiack.com/average-apr-for-car-loan/?feed_id=21491&_unique_id=64eae6abdf898 #Wiack #Car #CarInsurance #CarRental #CarPrice #AutoLoans

Tìm kiếm Blog này

Wiack 3