A great auto loan can save you hundreds, if not thousands of dollars when buying a car. But in order to find a good car loan, it’s important to know how to properly compare your options. One of the most important factors to consider when shopping around for an auto loan is the Annual Percentage Rate, or APR. 

The APR indicates how much you will have to pay in interest and other fees each year in order to purchase the vehicle. A high APR can significantly increase how much you pay over the course of your loan term, which is why it’s crucial to find a loan with a good rate.

What Impacts My APR?

Auto loan APRs can vary widely based on a number of factors. Understanding what can impact APR will help you find the best rate for your circumstances. Here are the two main factors that can impact your APR:

  • Credit Score: Your credit score is generally one of the most important factors that will determine what kind of APRs you will have access to. With most financial institutions, higher credit scores will get you loans with lower APRs. Here at People’s, we function a little differently. All members get the same great rates regardless of their credit score or history.
  • Age of Vehicle: Newer cars that have not had a previous owner generally have lower APRs, largely because older or used vehicles have depreciated value and are therefore riskier to finance. To accommodate the extra risk, most lenders will put higher interest rates on older used cars.

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How Can I Get the Best Rate?

Finding an auto loan with a great APR can make your vehicle much more affordable in the long run. So, how exactly can you get the best APR for your situation? Here are a few ways you can get a better APR on your car loan:

  • Maintain a good credit score: Having a higher credit score will give you access to more competitive APRs, which is one of the reasons why it’s useful to keep your score as high as possible. You can boost your credit score by making payments on time, paying more than the minimum amount if possible, keeping your accounts open, and remaining well below your credit limit.
  • Shop around and compare rates: Comparing auto loans from different lenders is a great way to find competitive APRs. In addition to the APR, it’s also important to look at the loan amount and loan term (or length) to find the best fit for your unique situation.
  • Consider refinancing your auto loan: Sometimes, you need a car loan ASAP. This makes it difficult to compare rates and may leave you with an auto loan that has a high APR. If that’s the case, you may be able to refinance your loan with a different lender that can offer you a more competitive rate.

Ready to Find Your Best Auto Loan Rate?

While many traditional lenders rely solely on credit scores to determine your loan options, we take a more personal approach to lending. When you apply for an auto loan with People’s Community Federal Credit Union, we look at several factors that paint a fuller picture of who you are as a borrower, including long-standing membership and previous loan history at People’s Community Federal Credit Union and types of negatives on your credit report.

All People’s Community Federal Credit Union members receive the same competitive APRs regardless of their credit score. So if you’re approved for a loan with us, you won’t be penalized with a higher rate just because your credit score isn’t perfect. See our current rates here.

It’s important to note that you must be a People’s Community Federal Credit Union member to qualify for a loan, and we do not prequalify non-members.

Not a member yet? Joining is easy. You can join online or reach out to one of our representatives today by giving us a call or filling out a contact form. You can also stop by one of our branch locations.

FAQs

A good APR is going to fluctuate depending on market circumstances, but generally speaking, APRs in the low-to-mid single digits are considered excellent, while rates in the high single digits to low double-digits are more typical for borrowers with average credit. We’re proud to offer competitive rates to all our approved members.

The interest rate is the percentage charged on the principal loan amount, and the APR includes the interest rate plus any additional fees, closing costs, or other charges associated with the loan.

It’s considered the most important factor because it represents the true cost of borrowing money for a car. Unlike the base interest rate alone, the APR includes additional fees and costs. This gives you a more accurate picture of what you’ll actually pay.

A higher APR means more of your monthly payment goes toward interest rather than paying down your principal balance, which results in higher overall payments. On the other hand, a lower APR means lower monthly payments and more money staying in your pocket.

Banks are for-profit institutions that maximize returns for shareholders, which usually results in higher rates and fees for loans. Credit unions, like People’s Community Federal Credit Union, are cooperatives owned by their members, so you get better rates and lower fees.

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