The variables that impact car loan interest rates can seem like a tangled web. Your credit score, down payment, vehicle and financing source all intertwine to produce an interest rate that you'll have to live with for up to five years or more. For car shoppers with good credit, comparing interest rates offered by auto manufacturers when purchasing or leasing a new vehicle can be a smart way to save on their monthly payment. Even as interest rates are climbing, there are still very attractive APR rates offered by auto manufacturers based on a finance report from WalletHub. See which brands will help keep your rates low and find out if financing through the automaker is the right choice for you.

Automaker APR Offers 

APR by automakersTable: WalletHub

Buying a New Vehicle

The left column of the above table shows the APR rates offered by the financing arm of the largest automakers for shoppers with excellent credit. If you're looking to buy a new vehicle, going with a Kia, Dodge, Honda, Toyota or Acura will score you an APR well below the average of 3.54%. On the other end of the spectrum, if you're in the market for a Volkswagen, Hyundai, Mazda, Infiniti, or Mercedes, expect to pay more than average at 5% or more when you go with automaker financing offers.

Kia Forte 2019
Kia offers the best interest rates whether you're leasing or buying a new vehicle.

Leasing a Vehicle

Unlike buying a vehicle, leasing one can present a less transparent situation when it comes to the interest rate. This is because there is no standard APR equivalent for a lease as there is for a standard car loan. The lack of transparency puts more responsibility on the consumer to compare leasing offers.

In the righthand column of the above table, WalletHub determined the lease APR for the major automakers by taking the amount 'borrowed' (difference between the price of the car at the beginning and end of the lease), multiplying the monthly payments with the term of the lease for the total amount paid and calculating the difference between the total amount of payments on the lease contract and the amount 'borrowed' to represent the total amount of interest that was paid.

According to these calculations and based on a 15,000-mile lease for someone with excellent credit, Kia, Toyota, Audi, Mazda, Nissan, Infiniti, Volvo, and Volkswagen were found to offer the best lease deals well below the average APR of 5.94%. Alternatively, Acura, MINI, Chevrolet, Mercedes, and Dodge had the highest APR rates for leases. 

Is Auto Manufacturer Financing Best For You?

Auto finance at dealership

If your preferred automaker offers a higher interest rate than the average, should you forgo the car of your choice to save money on the loan? Not before you consider all the options. In addition to compiling the ARP rates offered by automakers, WalletHub also compared the offers of other financing sources such as national banks, regional banks, small community banks, and credit unions. 

Car manufacturers offer very competitive interest rates when put up against every type of bank. However, credit unions beat out automakers to come out on top for offering the lowest interest rates for both new and used vehicles.

Unfortunately, you can't just walk into any credit union and request a car loan. If you don't do your banking with a credit union already, you would need to go through the process of finding one you're eligible to join and setting up an account. There are also some drawbacks to consider before going with a credit union including limited services compared to a standard bank, inconvenient locations, and lagging technology when it comes to online banking. 

Another consideration is that not every car shopper will be able to get a loan through their auto manufacturer. Those in the market for a used car will have to find an alternative lender such as a bank or credit union. Also, the automakers' rates are for car shoppers with excellent credit and if your credit score is not in the good or excellent range, you won't get access to the low-interest rates outlined above. In this case, getting pre-approved through specialized lenders or credit unions will be the best strategy. 

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