You can see that rates change drastically by credit score. This also affects what you pay back to a large degree. Let’s say you took out a $10,000 auto loan with 60-month terms to purchase a new vehicle. If you have excellent credit and get a rate of 2.40 percent, you would pay an extra $622 in interest. In other words, it costs $606 to take out a loan of $10,000 with that interest rate.
Now, let’s say you have a decent score of 650 and get a rate of 6.70 percent. In this case, you would pay an extra $1,796 in interest on top of the loan.
If a fair score gives you an average auto loan rate of 10.87 percent, you’d pay $3,007 in interest. And if you had a very high rate of 14.76 percent, you’d pay $4,170 in interest on the $10,000 loan. Ouch.
However, your credit score isn’t the only determining factor. Employment status, income, and the type of vehicle you purchase also affect rates. Having a steady income stream and purchasing a newer vehicle will result in better auto loan rate offers.