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Car Buyers Could Save $5,198, on Average, By Shopping Around for Best Auto Loan Rate

Updated on:
Content was accurate at the time of publication.

With the COVID-19 pandemic and rising interest rates, the automotive industry has experienced a turbulent last few years — and getting a new car is becoming costlier. That’s not good news for drivers whose new car budgets may be tighter than before inflation took off.

But there is some good news, at least for those looking to take out an auto loan: Prospective buyers who shop around could save an average of $5,198 by choosing the offer with the lowest APR over the one with the highest, according to our analysis of auto loans offered on the LendingTree platform.

Here’s what else we found.

  • People who shopped for auto loans on the LendingTree platform in January 2023 could save an average of $5,198 by choosing the offer with the lowest APR over the one with the highest. The average highest APR offered in January 2023 was 13.82%, while the lowest APR was 8.98%. The average amount offered was $32,012 over an average term of 66 months. That comes to an average monthly payment of $695 versus $616.
  • Prospective car buyers with higher credit scores could save more than those with lower ones. Super-prime borrowers with credit scores of at least 720 could save an average of $6,711 over a typical loan. This is because they see the biggest average difference (or spread) between the highest and lowest APRs offered to them for the same loan at 5.75 percentage points (or 575 basis points).
  • Shopping around isn’t the only way to save a huge amount of money on a car purchase — raising your credit score is key. Someone with a near-prime credit score between 620 and 659 could pay $5,491 more than someone with a super-prime credit score to borrow $32,012 for an auto purchase — even after shopping around for the lowest possible rate.

Shopping around for an auto loan could save potential car buyers thousands. As of January 2023, people who shopped for auto loans on the LendingTree platform could save an average of $5,198 by choosing the offer with the lowest APR over the one with the highest.

In our analysis of the LendingTree platform, the average highest APR offered was 13.82%, while the average lowest APR was 8.98%.

Average auto loan offers 

Average minimum offer (APR)8.98%
Average maximum offer (APR)13.82%
Average amount offered$32,012
Average term length offered (months)66

Source: Analysis of a random sample of more than 1 million auto loan term offers to LendingTree users on the LendingTree platform in January 2023. Note: Calculations were done using non-rounded figures but rounded figures are displayed.

The average amount offered was $32,012 over an average term of 66 months. Those taking the maximum offer would pay an average of $695 a month, while those taking the minimum one would pay an average of $616 a month.

Average monthly payment 

Average monthly payment on a minimum APR offer$616
Average monthly payment on a maximum APR offer$695
Monthly difference$79
Difference over average term length offered$5,198

Source: Analysis of a random sample of more than 1 million auto loan term offers to LendingTree users on the LendingTree platform in January 2023. Note: Calculations were done using non-rounded figures but rounded figures are displayed.

According to LendingTree chief credit analyst Matt Schulz, those potential savings could be big for car buyers.

“Over a year, that’s more than $900 that could be used to pay bills, knock down debt, build an emergency fund, save for retirement or college or countless other things that can help make a family’s financial life easier and more secure,” he says. “Spread those savings out over a five- or six-year loan and the numbers are eye-opening.”

Some consumers could save even more than others — particularly those with good credit. In fact, super-prime borrowers with a credit score of at least 720 could save an average of $6,711 over a typical loan.

That’s because they see the biggest average difference (or spread) between the highest and lowest APRs offered to them for the same loan. The average highest APR super-prime borrowers were offered on the LendingTree platform was 11.88%, while the average lowest APR offered was 6.13% — a spread of 5.75 percentage points (or 575 basis points).

Super-prime borrowers were also offered the biggest loans, at an average of $37,298. In total, this represents a 13.3% discount on the cost of purchasing a vehicle.

Average auto loan offers by credit score

Source: Analysis of a random sample of more than 1 million auto loan term offers to LendingTree users on the LendingTree platform in January 2023. Note: Calculations were done using non-rounded figures but rounded figures are displayed.

Meanwhile, prime borrowers with credit scores between 660 and 719 could save $5,448. With an average maximum APR of 12.25% and an average minimum APR of 6.99%, there’s a difference of 5.26 percentage points. That’s on an average offered loan of $31,155 across 67 months — representing a 12.6% discount on the cost of purchasing a vehicle.

Following that, near-prime borrowers with scores between 620 and 659 could save $4,276. That’s thanks to an average difference of 4.22 percentage points between the average maximum APR (15.01%) and minimum APR (10.79%). On an average offered loan of $28,074 across 69 months, that’s a 10.2% discount.

Subprime borrowers with scores below 620 could still save a decent amount of cash, though their savings are much less significant than those with better credit scores. These potential buyers could save $1,964. They see the lowest average spread — with an average maximum APR of 19.84% and an average minimum APR of 17.48%, that’s a difference of 2.36 percentage points. On an average offered loan of $21,372 across 69 months, that represents a 5.5% discount.

Average monthly payment by credit score

Source: Analysis of a random sample of more than 1 million auto loan term offers to LendingTree users on the LendingTree platform in January 2023. Note: Calculations were done using non-rounded figures but rounded figures are displayed.

According to Schulz, higher credit score buyers have more financing options than those with low credit scores because lenders see them as less risky.

“Your credit score tells a lender how likely you are to pay them back if they lend you money,” he says. “Banks are eager to lend to folks with great scores, but they’re much more reluctant to lend to those who don’t. The truth is that there is little in life that is more expensive than crummy credit. It can cost you thousands and thousands of dollars in the form of interest, fees and other costs associated with everything from auto loans to insurance premiums.”

Given the difference in offers between those with good credit scores and those with poor credit scores, it’s worth emphasizing that shopping around isn’t the only way to save some cash on a car purchase. Raising your credit score is also crucial.

On the average loan size of $32,012, someone with a near-prime credit score between 620 and 659 could pay $625 a month over 69 months based on the average lowest APR offered; meanwhile, those with super-prime credit scores of 720 and above could pay $588 over 64 months. That means near-prime credit score borrowers could pay $5,491 more than someone with a super-prime credit score — even after shopping around for the lowest possible rate.

Total cost of a $32,012 loan by credit score

Source: Analysis of a random sample of more than 1 million auto loan term offers to LendingTree users on the LendingTree platform in January 2023. Note: Calculations were done using non-rounded figures but rounded figures are displayed.

Unsurprisingly, that difference is most prominent between subprime and super-prime borrowers. On the average loan size of $32,012, subprime borrowers with scores below 620 could pay an average of $739 a month over 69 months — meaning they could pay $13,354 more than super-prime borrowers even after shopping around.

If you’re looking to finance a new car, Schulz says shopping around is the best thing you could do to try to get low rates. Particularly, he recommends:

  • Get preapproved for financing. “Chances are the financing deals offered by the car dealership aren’t going to be nearly as good as what you could get from an outside lender,” he says. “Take the time to rate shop. It can make a big difference.”
  • Don’t be afraid to wait. “Auto loan rates are high right now,” he says. “If you can wait a few months to get that vehicle, using that extra time to save money for a down payment, it’s likely a good idea.”

In addition, for those who aren’t super-prime borrowers, Schulz recommends taking steps to improve your credit score. While it takes time to raise your credit score, he offers the following tips:

  • Knock down your credit card debt. “That’s a good thing to do for many reasons, but it could also send your credit score higher because it could improve your credit utilization, which is the second-most important factor in FICO credit-scoring formulas,” he says. “Of course, paying down that debt is easier said than done, but it should be every credit cardholder’s goal.”
  • Increase the credit limits on your current credit cards. “It’s vital that you don’t just see the higher credit limit as an excuse to spend because — if you do — you’ll end up making things worse on yourself,” Schulz says. “However, if you can avoid the lure of spending that new credit, it could lower your utilization rate and bump up your score.”
  • Removing mistakes from your credit report can significantly boost your credit score. “These errors are more common than people realize and can do real damage to your score,” he says. “It’s difficult enough to have a good credit score. The last thing you want is for someone else’s mistakes or fraudulent activity to weigh down your score unnecessarily. Review your reports from the three major bureaus at AnnualCreditReport.com and report any mistakes to the bureaus when you find them. Just know that the process of removing these errors can take time.”
  • Ultimately, nothing matters more to your score than your payment history. “If you’re planning to apply for a loan soon, take steps to make sure you’re always paying on time,” Schulz says. “Autopay can be a great way to do so.”

LendingTree researchers analyzed a random sample of more than 1 million auto loan terms offered to LendingTree customers on our platform in January 2023.

The average lowest and highest APRs offered to each customer were calculated, along with the average loan size and term length offered across all the offers they received.

These results were then aggregated by credit band category before being used to calculate the average monthly payments and total amount paid over the length of the loan under the highest and lowest offered APRs.

The credit band categories are defined as:

  • Subprime (credit scores below 620)
  • Near-prime (620 to 659)
  • Prime (660 to 719)
  • Super-prime (720 and higher)

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