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Now is the Time to Refinance: Auto Loan Rate Trends for 2021

Updated: Dec 21, 2022


Although prices for new and used cars have increased over the last year, auto loan rates have come down drastically in 2020 due to the COVID-19 crisis and have continued to come down during 2021.

Rates Continue to Decline in 2021

This year, according to Bankrate data, the national average rate for a 60-month new auto loan started at 4.24% APR and as of October 6, 2021, the average APR is 3.86%. Meanwhile, the average APR on a 36-month used vehicle loan started at 4.53% at the beginning of the year and has declined to 4.31% APR as of October 6 as well.

According to Bankrate Chief Financial Analyst Greg McBride, CFA, “Amid the recovering economy, the Federal Reserve is still going to keep interest rates low. New car loan rates are currently at their lowest since early 2015.” The Federal Reserve has been helping to keep rates low and borrower friendly in 2021. It has made it clear that it intends to keep this course through this year and possibly through 2022 as well.

Boost Your Chances for a Lower Rate with a Higher Credit Score

Although average rates are extremely low currently, the best way to ensure you qualify for those low rates is to improve your credit score. Someone with a lower credit score will have higher interest rates since they look riskier based on that credit score. The average APRs on used and new car loans were 21.07% and 14.66% for individuals with credit scores between 300 and 500 according to Experian’s data for the first quarter of 2021. Comparatively, top-tier credit scores between 781 and 850 had average APRs of 3.71% and 2.41% for used and new car loans.


Improving your credit score is the best way to increase your chances of qualifying for a better interest rate. To do this, make timely payments and keep your credit utilization ratio low, as well as diversifying your credit mix and consistently monitoring your credit report.

What Are My Next Steps?

If you’ve bought a car and financed at a high rate, then now is the best time to think about refinancing. With new and used car prices so high, lowering your interest rate on your current loan is your best option to combat purchasing a car at above ticket price.

The Member Closing Center works with only the best credit unions to offer some of the lowest rates available to their specific list of pre-qualified candidates for refinancing. You can check here to see if you are in The Member Closing Center’s offer network and are pre-qualified for a lower auto loan rate.


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