How Often Do Auto Loan Rates Change?

It seems that auto loan rates can fluctuate at the blink of an eye, leaving you wondering why and exactly when they change. The truth is, they can pretty much change at the blink of an eye at a bank’s discretion. If you want a general national auto loan rate average, you can easily track down whether the rate has changed overnight. But indeed, there are other factors that can affect when auto loan rates change.

Here are some of the factors affecting auto loan rate changes:

  • Whether you use an online bank, credit union or brick-and-mortar bank. One reason that you can initially find one rate and then suddenly see one significantly higher or lower depends on whether you choose to work with an online bank, credit union or brick-and-mortar bank. If you work with an online bank, you’re likely to see lower rates than with a credit union, and likewise with a brick-and-mortar bank. Online banks deal with the least overhead, giving them leeway to offer lower auto loan rates. Credit unions function locally, giving them freedom from national bank standards. Brick-and-mortar banks, however, suffer the strictest guidelines, thus resulting in them typically offering the highest rates.
  • Your credit score. Another factor that can change car loan rates is your credit score. If you have a lower credit score, the rate you are initially introduced to could rise several points. Likewise, if you’re able to strengthen your score, you might see the rate lower. Your credit is a strong determinant in your loan rate and therefore should be analyzed closely before approaching a lender.
  • The length of the loan term. The amount of time you decide to finance the vehicle is another determining factor in rate changes. For instance, if you choose to select a 48-month term then your rate will be lower than if you choose a 60-month term.
  • Buying new or used. If you’re thinking of financing a used vehicle then you can expect a higher rate than if you finance a new vehicle.

Auto loan rates can fluctuate in varying intervals and for a number of reasons. So as you consider financing a car, take all of the reasons into consideration to help acquire the best car loan rate possible.


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