The typical interest rate on a new car loan falls in the range of about 6% to 7% for borrowers with good credit, though your actual rate can land anywhere from under 5% to over 20% depending on your credit score, the loan term, and where you borrow. For a used car, rates run significantly higher. Understanding what drives these numbers helps you judge whether the rate you’re offered is competitive or worth shopping around to beat.
Average Rates for New and Used Cars
As of spring 2026, the national average rate on a 48-month new car loan is 6.89%, and a 60-month new car loan averages 7.02%. These figures represent the middle of the market. Plenty of borrowers pay less, and plenty pay more.
Used car loans carry noticeably higher rates than new car loans across every credit tier. A buyer with prime credit (scores of 661 to 780) pays roughly 6.27% on a new car loan but 9.98% on a used car loan. The gap exists because used vehicles depreciate faster and carry more mechanical risk, making lenders less confident they could recover their money if the borrower stopped paying.
How Your Credit Score Changes the Rate
Credit score is the single biggest factor in the rate you’ll be offered. Lenders sort borrowers into tiers, and the difference between the top and bottom tier is enormous. Based on Q3 2025 data from Experian, here’s what each tier typically pays:
- Super prime (781 to 850): 4.66% new, 7.70% used
- Prime (661 to 780): 6.27% new, 9.98% used
- Near prime (601 to 660): 9.57% new, 14.49% used
- Subprime (501 to 600): 13.17% new, 19.42% used
- Deep subprime (300 to 500): 16.01% new, 21.85% used
To put those numbers in dollar terms: on a $30,000 new car loan over 60 months, a super-prime borrower at 4.66% pays about $3,650 in total interest. A subprime borrower at 13.17% pays roughly $11,200 in interest on the same loan amount. That’s a $7,500 difference for the exact same car, driven entirely by creditworthiness.
If your score sits near a tier boundary, it’s worth checking whether paying down a credit card balance or correcting an error on your credit report could nudge you into the next bracket before you apply.
Shorter Loans Cost Less in Interest
Lenders charge lower rates on shorter loan terms because they’re exposed to less risk. A 48-month new car loan currently averages 6.89%, while a 60-month loan averages 7.02%. The gap widens further with 72- and 84-month loans, which carry higher rates and dramatically increase total interest paid.
A longer term does lower your monthly payment, which makes it tempting. But you’re paying interest for more months at a higher rate, and you’re more likely to end up “upside down,” meaning you owe more than the car is worth. If you can manage the higher monthly payments, a 48- or 60-month loan will save you real money.
Consider a $25,000 loan at 6.89% over 48 months: you’d pay about $3,650 in interest with a monthly payment around $597. Stretch that to 72 months at a slightly higher rate and your monthly payment drops, but total interest climbs well past $5,000.
Where You Borrow Matters
The dealership’s finance office is the most convenient place to arrange a loan, but it’s rarely the cheapest. Dealers often mark up the rate they receive from a lender and keep the difference as profit. You won’t always know this is happening unless you’ve already gotten quotes from other sources.
Credit unions consistently offer the lowest auto loan rates. On average, their new car loan rates run more than 2 percentage points below what banks charge. The catch is that you need to be a member, though many credit unions have easy eligibility requirements tied to your employer, location, or even a small donation to a partner organization.
Banks and online lenders fall somewhere in between. Online lenders can be competitive, especially if you have strong credit, and they typically let you get preapproved without a hard credit inquiry (which temporarily dings your score). Getting preapproved from two or three sources before visiting a dealership gives you a baseline rate to negotiate against.
Other Factors That Affect Your Rate
Beyond credit score, term length, and lender type, a few other variables move the needle. The size of your down payment matters: borrowing a smaller percentage of the car’s value reduces the lender’s risk and can lower your rate. A down payment of 10% to 20% is a common target.
The age and mileage of the vehicle play a role for used cars. A two-year-old certified pre-owned car will typically get a better rate than a seven-year-old vehicle with 100,000 miles. Some lenders won’t finance cars older than a certain age or set minimum loan amounts that effectively exclude cheaper used vehicles.
Your debt-to-income ratio, which is how much of your monthly income goes toward debt payments, also influences approval and pricing. If you’re already stretched thin with a mortgage, student loans, or credit card debt, lenders may charge a higher rate or decline the application entirely.
How to Get the Best Rate
Start by checking your credit score through your bank or a free monitoring service so you know which tier you’re in. If your score needs work and the purchase isn’t urgent, even a few months of on-time payments and lower credit card balances can make a difference.
Get preapproved with at least two or three lenders before you shop for a car. Credit unions, your primary bank, and online lenders are all worth checking. When you apply to multiple auto lenders within a 14-day window, credit scoring models treat them as a single inquiry, so rate shopping won’t hurt your score.
Bring your best preapproval to the dealership. The finance manager may be able to beat it, and if not, you already have a competitive rate locked in. Focus negotiations on the total cost of the loan (rate plus term), not just the monthly payment. Dealers sometimes stretch the term to make a high rate look affordable on a per-month basis, which costs you thousands more over the life of the loan.