Car interest rate for 700 credit score

What are car loans and how do they work?

Auto loans let you borrow the money you need to purchase a car. Since car loans are typically “secured” they require you to use the automobile you are buying as collateral for the loan. You are typically asked to pay a fixed interest rate and monthly payment for 24 to 84 months, at which point your car will be paid off. Many dealerships offer their own financing, but you can also find auto loans at national banks, local credit unions and online lenders. 

When shopping for an auto loan, compare APRs across multiple lenders to make sure you are getting a competitive rate. Look for lenders that keep fees to a minimum and offer repayment terms that fit your needs. 

Loan details presented here are current as of September 1, 2022. Check the lenders’ websites for more current information. The auto loan lenders listed here are selected based on factors such as APR, loan amounts, fees, credit requirements and more. 

As of September 8, 2022, the average APRs according to a Bankrate study are the following.

Types of auto loans

Car loan options go beyond just new and used. Each auto loan type has specific uses, and knowing what type you need can make the loan shopping process easier. 

• New car loan: If you are looking to purchase a new car, you should seek out a new car loan. Dealerships offer new car financing on the lot, but you can also get them from banks, credit unions and online lenders. Shop around for your best interest rate and terms. 
• Used car loan: Buying a used car from a dealership will require a used car loan, and you can get them at the same places you would get a new car loan. Limits are often placed on how much mileage can be on the car and how old it can be. 
• Auto refinance: If you originally took out a loan at a dealership, or just didn't get a good rate, you may want to refinance and get a better interest rate. Or you can rework your terms to get a lower monthly payment. These loans aren't available through dealerships. 
• Cash-out auto refinance: To get a little extra cash with your refinance, you can take out a cash-out refinance loan. Equity you have in your car can be borrowed against along with the balance you are refinancing. 
• Private party: When you are buying a used car from an individual seller and do not have the cash on hand, you will need a private party auto loan. These are less common, but available at some banks, credit unions and online lenders. 
• Lease buyout: Leasing a car can come with the option to buy the vehicle at the end. To do so, you can take out a lease buyout loan.

Best auto loan lenders in 2022

Best overall

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Apply on partner site

Min. credit score:

Not disclosed

Fixed APR From:

5.99% –10.99%

Loan amount:

$5,000– $100,000

Term lengths:

2 to 7 years

Min. annual income:

$0

Overview: Lightstream offers unsecured auto loans for drivers online. It covers a range of financing needs including loans for new cars, used cars from a dealer or private seller, lease buyouts and even classic car financing.

Why Lightstream is the best overall: Lightstream offers quick funding for drivers in a pinch and a wide range of loan amounts. 

Best big bank option

Min. credit score:

Not disclosed

Fixed APR From:

4.79%

Loan amount:

$7,500

Term lengths:

4 to 6 years

Min. annual income:

$0

Overview: Bank of America offers flexible and convenient auto loans you can apply for directly on its website. Rates are competitive, and you can qualify for additional discounts if you are an eligible Bank of America customer.

Why Bank of America is the best big bank option: With over 4,000 brick-and-mortar locations, Bank of America is perfect for an in-person experience coupled with discounts for account holders. 

Best for convenience

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Apply on partner site

Min. credit score:

Not disclosed

Fixed APR From:

Not disclosed

Loan amount:

$5,000– $200,000

Term lengths:

2 to 6 years

Min. annual income:

$0

Overview: Capital One’s financing works as a “one-stop shop” for your auto loan and vehicle purchase. Through one of its partnered dealerships, you can borrow as little as $4,000 with terms from 24 to 84 months.

Why Capital One is the best for convenience: The Capital One Auto Navigator site lets you search for inventory in your area and gives you the ability to see how different makes, models and features will affect your total cost. 

Best fully online experience

Min. credit score:

Not disclosed

Fixed APR From:

6.85%

Loan amount:

Not specified

Term lengths:

3 to 6 years

Min. annual income:

$0

Overview: ​​Carvana lets you shop for a car online and pick up your purchase from a giant “car vending machine” or choose from its other delivery options. Its process lets you enjoy a unique experience, and Carvana also offers competitive car loan rates and terms.

Why Carvana is the best fully online experience: Carvana offers a streamlined online experience where you can shop for and finance your new vehicle all from the comfort of your own home.

Best for shopping for multiple loan offers

Min. credit score:

575

Fixed APR From:

3.69%

Loan amount:

$5,000– $8,000

Term lengths:

2 to 6 years

Min. annual income:

$0

Overview: With no application fee and convenient online application myAutoLoan works with an expansive network of lenders to enable you to compare offers and find the right lender for your needs. It also offers loans for refinancing and lease buyouts. 

Why myAutoLoan is the best for shopping for multiple loan offers: You can easily compare multiple loan offers all on the myAutoLoan platform with no hard credit pull. This platform lets you enter your information once and receive multiple loan offers in one place.

Best for fair credit

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Min. credit score:

Not disclosed

Fixed APR From:

2.2% –29.99%

Loan amount:

$9,000– $60,000

Term lengths:

2 to 7 years

Min. annual income:

$0

Overview: Upstart is an online lender that utilizes the intelligence of AI technology to cater to drivers looking to refinance their car loans. It factors a driver's work and education history for its loans that can be refinanced up to $60,000. 

Why Upstart is best for fair credit: Drivers with fair credit scores, 510 to 669, may not receive competitive rates from traditional lenders. But Upstart's smarter rate approach will give any driver a better chance to receive decent rates to save money. 

What to know before applying for an auto loan

When looking for a car loan, it is best to shop around with a few lenders before making your decision. Each lender has its own methodology when reviewing your application for a loan and setting your interest rate and terms.  

Generally, your credit score will have the biggest effect on the rates offered. The higher your credit score, the lower APR you will receive. Having a higher credit score may also allow you to take out a larger loan or access a broader selection of repayment terms, but there are still ways to finance a car with bad credit. Choosing a longer repayment term will lower your monthly payments, although you will also pay more interest overall.  

If you find a few lenders that you like, see if they offer preapproval — going through this process will let you see which rates you qualify for without affecting your credit score. 

Auto loan rates by credit score

As mentioned, lenders use credit score as the primary determinant of a potential borrower's ability to pay off a loan. So, the better your credit score is, the more competitive interest rates you will receive. Below are the average APRs for new and used vehicles in the second quarter of 2022 according to Experian.

How to choose the best auto loan lender 

Choosing the right lender comes down to financing a vehicle you can afford. It is recommended that you get quotes from at least three lenders outside of a car dealership before deciding which is right for you. Pay special attention to the following factors:   

1. 1. Approval requirements. Every lender has different requirements to receive approval. Lenders will consider aspects like your credit history, income and debt-to-income ratio. Your credit serves as the primary determinant of potential rates. Keep in mind that typically, the worse your credit score is, the less competitive your rates will be. 
   2. Annual percentage rate. The APR represents the amount of interest that you will have to pay during the loan. Pay close attention to this number — a higher APR means more interest and thus a larger monthly cost. Also remember to shop the total loan amount, not just the monthly payment. 
   3. Loan terms. While a lower monthly payment may seem appealing, pay close attention to available terms, and consider how the lifetime of your loan will impact your overall cost. A longer loan term will lower your monthly cost, but you will pay more interest. Conversely, a shorter loan term means a higher monthly cost but a lower cost over the life of the loan. 

How to get an auto loan 

Once you find the right auto loan for your situation, follow these steps: 

1. 1. Shop around. It is usually best to compare rates and terms from at least three lenders before moving forward with an auto loan.
   2. Prequalify. Prequalifying with lenders lets you see your potential rates without a hard credit check. 
   3. Complete your application. To complete your application, you will likely need details about your car, including the purchase agreement, registration and title. You will also need documentation like proof of income and insurance, proof of residence and a driver's license. 
   4. Make payments. Your payment schedule will start as soon as you receive your auto loan. If needed, set up a calendar reminder or automatic payments to keep you on track with your monthly bill and avoid late payments.  

How the 2022 Fed hikes impact the cost to finance a car

The November meeting of the Federal Open Market Committee (FOMC) raised the benchmark rate to 3.75-4 percent, this the sixth consecutive hike working towards the goal of controlling growing inflation. For drivers already dealing with new vehicles costing an average of over $48,300 in August 2022, according to Kelley Blue Book, and the price to fill up at the pump hitting record highs, the added burden of higher rates feels daunting.  

The benchmark rate doesn’t directly shift auto rates, but it affects the number that auto lenders base their specific rates on. This means that it is possible you will be met with steeper costs to borrow money for vehicle financing due to the Fed hike, but the hike itself is only one part of that increase.  

Even with higher costs across the board, there are still a few ways to prepare and save money, regardless of movements made by the central bank.  

1. 1. Apply for preapproval. By walking into the dealership with financing in hand you garner negotiating power and come equipped with a firm understanding of how much you can afford to spend.  
   2. Trade-in your current vehicle. Consider trading in your current vehicle. You can save money on the vehicle down payment and don't have to hassle with selling it yourself. Depending on the state you are buying in, you may also be able to save on taxes.
   3. Compare at least three different lenders. Shopping around to different lenders ensures that you are getting the best deal available. It may take time to find the right lender for your needs, so be patient.  
   4. Calculate the true cost of ownership. Purchasing a vehicle is made up of more than just the price of the vehicle and monthly payments. So instead, you must do the math so that you only purchase what you can afford.  
   5. Consider buying electric. Although EVs can be priced a bit higher than traditional gas vehicles, the cost over the lifetime of the loan tends to be less expensive. Along with this, there are green loans and many states offer tax credits. 

FAQs about auto loans

Methodology

Bankrate considers 18 different factors when selecting top auto loans. Acceptance criteria, whether rates and fees are available and APR all influence lender scores. These scores are broken up into four categories.

• Availability: Loan amounts, repayment options, dealership requirements and state availability all contribute to this category.
• Affordability: This section houses APR ranges, acceptance criteria, fees and discounts. 
• Customer experience: How long you have to shop, customer service availability, whether there’s an app and autopay availability are accounted for in this section.
• Transparency: This category accounts for the availability of fees and rates along with whether prequalification is available.

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