What is a Good Interest Rate for Your Car Loan?

Finance Center Payment Calculator

Being prepared to purchase a new Hyundai in the Sparks area means understanding the ins-and-outs of financing. So what is a good interest rate for your car loan? You don’t want to overpay when it comes to an auto loan, but all of the factors that affect your down payment and financing aren’t always in your immediate control. The Lithia Hyundai of Reno Finance Center is here to help with this handy guide that will go over the average rates for new and used cars. Once you’re confident you understand, apply for financing online!


New and Used Car APR

Have your eye on a brand new Hyundai Sonata or Santa Fe? Here are the interest rates you can expect relative to your credit score:


Average New-Car Loan Annual Percentage Rate Average Used-Car Loan Annual Percentage Rate
781-850 3.17% 781-850 3.8%
661-780 4.03% 661-780 5.48%
601-660 6.79% 601-660 10.1%
501-600 10.98% 501-600 16.27%
300-500 13.76% 300-500 19.32%


As you’ve probably already noticed, lower credit card scores lead to higher rates. Still, reach out to our finance center to learn how to improve your credit score and obtain a better annual percentage rate (APR).

How Do You Get the Best Interest Rate?

Getting the best interest rate possible from a traditional financial institution or auto dealership means planning ahead. Here are some quick tips:

  • Check your credit history and note the score
  • The higher the credit score, the lower your interest rate
  • You’ll also want to be ready to negotiate
  • Car loan rates for Fernley drivers can range anywhere between 3.17% and 13.76% depending on your credit score
  • Plan for the rate you want and be prepared to negotiate if they offer you something higher than you expected

Don’t forget about the offer! You don’t only want to focus on the payment and ignore the rest of the deal. Pay close attention to all of the details.

What is the Average Interest Rate on a Car Loan?

On a three-year car loan, the average interest rate is around 3% to 4.5%. But everyone is different, there truly is no “average” person, so you might be offered a different rate based on your credit report. The easiest way to compare your car loan offers and potential interest rates is to shop around or get pre-approved and compare the results. 

How Does Car Loan Interest Work

For those who’ve never had a loan, the concepts of loans and interest rates can be confusing, but we’re here to give a quick guide. Here are a few common questions we get at Lithia Hyundai of Reno, and the corresponding answers:

How does interest work on a loan?

Interest is the fee you’re paying a lender on top of your loan balance. Essentially, you’re paying a fraction of the principal balance on top of what you owe for the privilege of being able to take out the loan. Note: Math is hard, that’s why we have a payment calculator.

What is a simple interest loan?

A simple interest loan is your total principal, multiplied by your interest rate, multiplied by the time period (in months) of the loan. A $12,000 loan with a 1% simple interest rate and a 12-month loan period would end up being a monthly payment of $1,120—that extra $120 in interest is profit for the bank. At the end of your loan period, you’ll have paid $1,200 in interest, for a total of $13,200. The thing is, you often see annual percentage rates (APRs) listed alongside financing offers. The APR is the simple interest PLUS any additional fees that might go to the dealer or financial institution from whom you’re borrowing.

Is car loan interest deductible?

The interest on a vehicle you use for personal use is not tax deductible. It is possible to deduct interest from a vehicle used for business, though that is a complicated process best discussed with our finance center or your accountant.

Apply for Financing at Lithia Hyundai of Reno

The Lithia Hyundai of Reno Finance Center is here to help drivers from Carson City and beyond secure the loan or lease that best suits their budget. Feel free to use our online tools to value your vehicle trade-in and estimate your monthly payments. You can also learn the difference between Kia vs Hyundai and which automaker offers the better deal on their vehicles. If you have any questions, please give us a call at (775) 583-4288.

Lithia Hyundai of Reno 39.4990238, -119.7881854.