Question 1

What is a good interest rate for a car loan?

Accepted Answer

Average new car loan rates in the US range from 5–8% for excellent credit (720+ score) and 8–15% for fair credit (580–669). Used car loans typically run 1–3% higher. Credit unions often beat bank rates by 1–2%.

Question 2

How much car can I afford?

Accepted Answer

A common rule: keep total car payment (loan + insurance + maintenance) below 15–20% of monthly take-home pay. The 20/4/10 rule: 20% down, 4-year max term, 10% of income for all car costs.

Question 3

Is it better to finance through a dealer or bank?

Accepted Answer

Dealers may offer promotional 0% financing from manufacturers, but standard dealer rates are often higher than bank or credit union rates. Always get pre-approved from your bank/CU before visiting a dealer to use as a negotiating baseline.

Question 4

Should I choose a 48-month or 72-month car loan?

Accepted Answer

Shorter terms mean higher monthly payments but significantly less total interest. A 48-month loan on $25,000 at 7% costs ~$1,400 less in interest than 72 months. Longer terms risk being "underwater" (owing more than the car is worth).

🚗 Car Loan Calculator

Loan details

Continue planning →

Frequently asked questions

Recommended services

Related tools