Customers take out a loan or lease, as opposed to paying cash, for the vast majority of car and truck purchases. Loans or leases account for more than 80% of new vehicle transactions, and a substantial portion of used cars and trucks as well, although less than half. So, whether a borrower can afford the vehicle they want may come down to the interest rate they are offered, which largely comes down to the borrower’s credit history. According to the Experian credit bureau, the average monthly auto loan rate for borrowers with “super prime” credit was 5.25% in the second quarter, the latest available, vs. an average 15.77% for borrowers with “deep subprime” credit. The difference is thousands of dollars over the life of the loan. Experian defines “super prime” as credit scores above 780 and deep subprime as 500 or lower.

 

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