What is a Good Interest Rate for a Car Loan?

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If you live around Capitola or Santa Cruz and want to finance a new Subaru, you’re probably wondering “what is a good interest rate for a car loan?”. Well here at Santa Cruz Subaru, we are happy to help you answer that question as well as other questions such as “What is a good car loan rate?”. The average car loan interest rate fluctuates based on your credit score and several other factors. Below you can learn the average interest rate for a new and used Subaru based on your credit score. It varies by lender, so when you’re ready to apply for Financing, contact Santa Cruz Subaru.

New and Used Car Loan Interest Rate by Credit Score

Average Credit Score

Annual Percentage Rate Used Car Loan

Annual Percentage Rate New Car Loan

780 or better









501-600 10.85%


500 or less 13.70%


What Factors Impact the APR on Your Car Loan?

Now that you know what a good car loan rate is, are you wondering what the average interest rate on a car loan is and what influences it? The average car loan interest rate fluctuates based on the Prime rate set by the Feds. When it comes to your interest rate, it varies depending on your creditworthiness. Some factors that can cause a low credit score (and a higher interest rate) are being late on loan payments, having debts in collection, or having too much debt compared to your income. These problems could be an indication that a borrower has trouble managing their finances and meeting their obligations.

The Length and Type of Loan Impacts Your Car Loan Interest Rate

The type of loan you get around Scotts Valley also impacts your car loan interest rate. Used car loan interest rates are usually higher than new Subaru interest rates for a few reasons. The first reason is that the car has begun to depreciate, and that reduces its value. Also, the older the vehicle, the more difficult it is to get approved for financing. Lastly, when the dealership takes in a pre-owned car on trade in Aptos or Monterey, they know they will probably have to spend money on it for repairs on top of the money they already paid to acquire it.

The term length of the auto loan also influences the interest rate. The longer the car loan term, the higher the APR will be, but the trade-off is lower monthly payments. A higher car loan interest rate helps the lender get more of their money back sooner if the buyer defaults on the loan.

Apply for Financing at Santa Cruz Subaru Today

Now that you understand what a good interest rate for a car loan is and don’t need to ask, “What is the average interest rate on a car loan?” let the finance team at Santa Cruz Subaru help you with the financing process. We always treat all our Monterey and Watsonville customers with respect and patiently answer all questions. Head into our dealership near Capitola to see our large inventory of new and pre-owned models. Contact us today!

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