The car loan interest rate is an annual percentage of the amount of money that you finance. It serves as the price you pay for borrowing money from a financial institution. Interest rates are typically determined by economic factors and your individual credit score. The average interest rate will be higher during periods of economic uncertainty, but a higher credit score can help you secure a lower interest rate in comparison. You can increase your credit score over time by paying your bills and debts on time, maintaining a low debt-to-income ratio, keeping your credit card balance low and minimizing the number of accounts you open prior to your vehicle purchase.