If you're buying a car with an interest rate of 1.9% APR, you may be getting a good rate. When it comes to manufacturer car incentives on new cars and trucks, financing deals typically start at 0%, followed by 1.9% APR. While there may be lower interest rates available, 1.9% can be a good deal under some circ*mstances.
How Good Is 1.9% APR?
In terms of cost, an interest rate of 1.9% APR may not add much to your overall car purchase. On a $30,000 SUV, we estimate that a 5-year loan at 1.9% APR would equate to $1,471 in money spent on interest alone. In contrast, a rate of 4% would equate to $3,150, while a loan at 6% would cost a little under $4,800.
Do I Qualify For 1.9% APR?
Your actual rate will vary based on a variety of factors. For example, captive lenders typically offer the best rates to buyers with above-average credit scores. According to a dealer incentive bulletin, Hyundai is offering 1.9% APR on the Kona EV in base SE trim. However, the deal requires Tier 1 or 2 credit, which for Hyundai means a FICO score over 720.
Lender requirements may vary, and manufacturer car deals change month to month. In addition to your FICO, lenders may take into account your payment history. If you happen to have a thin credit file, getting approved for a loan may be more challenging. Market conditions could make great APR deals harder to find this year.
Can I Get A Low APR And A Rebate?
If you've decided to buy rather than lease, snagging a low rate is just one part of the equation. You may still want to negotiate the price of the car if you're able to do so. In addition, it's important to keep in mind that most APR deals can't be combined with rebates. This could require you to do a bit of math to find the best deal.
For example, a $30,000 car would cost $31,471 based on a 5-year loan at 1.9%. If you have the option to take a $3,000 rebate instead of the APR offer, it could be a better deal. Even with a rate of 4%, taking the rebate would cost $29,835. That's a difference of $1,636, plus a lower monthly car payment before taxes & fees.
- Alex Bernstein Senior Pricing Analyst
Alex has been writing about car buying and leasing for over a decade. Originally from San Francisco, Alex has a degree in History from the University of California, Santa Barbara, and has been a lifelong lover of cars. Alex’s work has been featured in publications such as Forbes, The Wall Street Journal, Motor Trend, and more.
