Getting a car loan can be an exciting step toward owning your vehicle, but it also comes with responsibilities—most notably, paying interest on your loan. Car loan interest rates can vary widely depending on several factors. Understanding what influences these rates will help you make informed decisions and save money in the long run. Whether you're applying for a new or used car loan, it’s essential to grasp the basics before choosing a financing option.

Credit Score
Your credit score is one of the most significant factors affecting car loan interest rates. If you have a high credit score, lenders will see you as a responsible borrower and are likely to offer you a lower interest rate. On the other hand, if you have a poor credit score, you may end up paying higher interest because the lender views you as a higher risk.