Overhaulin'

What is the average rate/term for a car loan?

I bought my first car a few years ago cash and am now looking to buy a another used car. My first car is a beater and so I want to upgrade to a better (but still used car). What is the average rate for a car loan and how long do people usually carry a car note for? I don't know if any of these things would matter but I am 26, living in Minnesota and have a mortgage.

Public Comments

1. If your credit score is good.Figure on 6 to 8 percent for about 60 months.
2. There is no average for rates or terms. Every sale is predicated on the strength or weakness of your credit. And with used cars, the year, make and model, plus mileage and options, along with your credit history, will determine how much a lender will will approve for the car you want. And for how long a term on the loan. I've seen loans from 6% to 29.9%. Terms from 24 months to 72 months. Each loan approved is predicated on the individual applicant's credit report since no two are alike. There are many factors in your credit report that are examined by lenders. Like how many years of history do you have? Is your debt to income ratio less than 30%? Do you make at least $2500/mth? Are you at less than 50% of your credit limit on all your credit cards? 2 or more 30 day late pays in the past year? Any 60 or 90 day late pays in the past 3 years? Any collections? Repo? Bankruptcy? And do you have a previous car loan paid in good standing? That last one is very important. You need to have a history of at least 1 previous car loan that will show the lender how well or badly you paid it each month. Without that, chances are very slim for approval unless you meet all the other requirements and have a 700+ FICO score. And even then, if you get the loan, it will be with a much higher APR since you're a high risk without it. Owning a home doesn't give you any advantage today when buying a car on payments. A house is immovable. If you default on it, the lender knows exactly where to find it. But a car is mobile. It can be hidden very easily if you default. That's why it's more difficult to get approved for a car loan than it is a home loan.