The higher APRs of longer term auto loans, however, can result in excessive interest costs that leave borrowers ‘upside down’-that is, owing more on the auto loan than the car actually costs.
The typical term length for auto loans is 63 months, with loans of 72 and 84 months becoming increasingly common. Most banks and credit unions provide payment plans ranging from 24 to 72 months, with shorter term loans generally carrying lower interest rates. Ranging from 300 to 850, FICO credit scores are computed by assessing credit payment history, outstanding debt, and the length of time which an individual has maintained a credit line. When combined with other factors relevant to an applicant’s auto loan request, including liquid capital, the cost of the car, and the overall ability to repay the loan amount, credit scores indicate to lenders the riskiness of extending a loan to an applicant. Consumers in this range should expect to pay rates close to the 5.27% mean. The median credit score for consumers who obtain auto loans is 711. Scores below 580 are indicative of a consumer’s poor financial history, which can include late monthly payments, debt defaults, or bankruptcy.Ĭonsumers with excellent credit profiles typically pay interest rates below the 60 month average of 4.21%, while those with credit profiles in need of improvement should expect to pay much higher rates.
For individual consumers, however, rates vary based on credit score, term length of the loan, age of the car being financed, and other factors relevant to a lender’s risk in offering a loan. The national average for US auto loan interest rates is 5.27% on 60 month loans.