New car loans had an average interest rate of 6.39%, while used car loan rates averaged 11.43% in the first quarter of 2026.

Your credit score plays a significant role in determining your interest rate, but other factors also play a role.

The best way to secure a competitive interest rate on your auto loan is to shop rates with multiple lenders and improve your credit score before you apply.

The average auto loan interest rate for new cars in the first quarter of 2026 was 6.39%, while the average used car loan interest rate was 11.43%, according to Experian's State of the Automotive Finance Market report.

These average rates matter because they let you know if the auto loan you receive is actually competitive — and whether you need to spend more time shopping around for the best auto loan rates. Learn the market so your next car loan is affordable for your budget and so you avoid paying more interest to your lender.

Expect new car rates between 4.5% and 16%. Used car rates trend higher, ranging from just over 6% to 22%. 

Credit score

New car loans

Used car loans

781 to 850 (super prime)

4.55%

6.30%

661 to 780 (prime)

6.23%

8.77%

601 to 660 (near prime)

9.67%

14.03%

501 to 600 (subprime)

13.44%

19.42%

300 to 500 (deep subprime)

16.01%

21.77%

Source: Experian State of the Automotive Finance Market, Q1 2026

Your APR won't be solely based on your credit, but it is a good way to check that you aren't overpaying for a car loan. If your auto loan offer doesn't align with market averages for your credit score range, it's a good sign that you need to keep shopping. Most lenders offer a preappoval process to check your rates, and your credit won't suffer if you apply with multiple auto loan lenders within a 14-day period. 

Should you wait to apply until you have good credit?

Auto loan rates increase if you fall outside of the prime range.  It's possible to get a good rate without a perfect score, but by improving your score for a car loan, you will likely qualify for a more competitive rate and pay less overall.

Interest is the price you pay each month to borrow money. The higher your interest rate, the more you pay overall for your loan. Even reducing your interest rate by a fraction of a percentage point can save you hundreds of dollars.

For example, we calculated the cost of a new car loan with a $30,000 balance and a term of 60 months. A borrower with excellent credit will pay around $170 less per month than a borrower with bad credit — and will save over $10,000 in interest over the life of the loan.

Average new car loan interest rate

Monthly payment

Total interest paid

4.66%

$560

$3,598

6.27%

$583

$4,992

9.57%

$633

$7,953

13.17%

$689

$11,362

16.01%

$730

$13,782

There are a few ways to improve your chances of getting a reasonable interest rate, regardless of your credit score.

Prequalify with multiple lenders. Apply with at least three lenders before choosing one. Most lenders offer either a preapproval or prequalification process so you can view your rates without causing multiple hard pulls on your credit. This tactic may also help you score competitive auto loan rates.

Make a larger down payment. A down payment decreases the amount you need to borrow. This means the lender takes on less risk, translating to lower interest rates. Experts recommend aiming for at least 20% of the car's purchase price, although the average down payment sits between 10% and 20% of the purchase price.

Get a co-borrower. If you have a lower credit score, consider asking a family member or trusted friend with an excellent credit score to cosign your auto loan. Your cosigner will assume the debt if you cannot pay it back, which means the lender has less risk.

Choose a short loan term. While your loan's term does not directly impact your interest rate, it does affect how much total interest you pay. Longer terms mean paying interest for longer, while shorter terms can save you money.

Improve your credit score. Higher credit scores consistently get better interest rates, and the difference can add up to hundreds of dollars in savings. Building your credit score takes time, but it also involves steps like lowering your DTI, which is important for qualifying for an auto loan.

Factor

How it affects your rate

What you can control

Your credit scores and finances

Lenders use your financial profile to determine whether you qualify for a loan and the rate you receive.

Take the time to improve your credit scores and pay down debt before applying for an auto loan.

Type of lender

Convenient dealer financing often charges more for the same loan you could get at a bank, credit union or online lender.

Apply for preapproval with multiple lenders in a short time period (two weeks) to ensure you're getting the most competitive rate.

Loan-to-value ratio

A high LTV will increase the overall cost of your loan and put you in a risky position of being upside-down on your auto loan.

Put down a high down payment and avoid financing add-ons, taxes and other fees with your loan. 

Economic and market conditions

Auto loan rates are influenced by Fed decisions and the supply of new and used auto loans. Higher market rates and limited supply lead to more expensive loans. 

If possible, wait to buy a car or apply for a loan until the market fits your needs. Expensive cars and high loan rates will mean paying much more on a loan than is reasonable.

Vehicle age and features

Older cars, or cars with more mileage, will be seen as more risk to lenders and lead to higher interest rates.

Shop for a relatively new vehicle if you're buying used, and avoid cars that have been in accidents or natural disasters. 

The two most common credit scores used when underwriting car loans are the FICO score and VantageScore, although some lenders may use an auto industry-specific scoring system instead. These scores consider risk factors associated with your likelihood of repaying an auto loan. Higher scores generally get lower rates.

Lenders will also consider your income and debt-to-income (DTI) ratio. DTI measures the percentage of your income going toward paying off existing debts. A high DTI could indicate you're not in a position to take on a car loan. Similarly, your income needs to be high enough to manage your car payments in addition to your current bills and expenses.

It can be tempting to go with dealer financing since it can be the most convenient option, but you have a choice of a bank or dealership loan. Getting financing from the dealership often means less paperwork overall. However, you may find more favorable rates from a bank, credit union or online lender.

All lenders consider your credit score, income and debt-to-income ratio, but they differ on what they find acceptable. Some may also consider your education or professional experience.

Loan-to-value (LTV) ratio compares the amount of your loan to the value of the car you are financing. Some lenders allow LTVs of over 100%, meaning they will loan you more than the cost of the vehicle. You can use this extra loan money to cover taxes or other expenses related to buying a car, but keep in mind that whatever you borrow will need to be paid back with interest.

Taking out a loan with a high LTV poses numerous risks, including significantly increasing your chances of becoming upside-down on your car loan. It's also an expensive way to borrow money that starts your new auto loan with negative equity. The best way to protect your finances is to make a good down payment and finance only what you absolutely need.

When the federal funds rate is high, as dictated by the Federal Reserve, it costs lenders more to borrow money. In turn, you are likely to face higher interest rates.

Following the most recent FOMC meeting, the current fed funds target rate is 3.50%-3.75%, but the central bank indicated the possibility of a rate cut later this year. If you have strong credit, experts forecast that auto loan rates may see a small decrease through 2026. However, those with poor credit are less likely to see relief.

Market conditions, like the production of new vehicles and the supply of used vehicles, will also impact your auto loan. The interest rate you receive won't change significantly, but you may need to pay more for a car if inventory is tight. That will lead to a more expensive loan, which could lead to higher rates. 

Lenders generally won't finance vehicles over 10 years old or with more than 100,000 miles. There can be other limits as well, generally based on criteria such as the brand, condition or value of the vehicle.

Your lender may also limit where you can purchase your vehicle. For instance, some independent dealerships cannot offer manufacturer financing. Similarly, companies like Carvana will only finance vehicles you purchase through their car-buying service.

To get started, prequalify for an auto loan with lenders online and offline to see the rates you may be eligible for.

The lowest car loan rates are typically reserved for borrowers with near-perfect credit scores. While you are not guaranteed to get the rate corresponding to your credit bracket, it is great for comparison purposes when shopping around for a good deal.

What is a good interest rate for a car loan right now?

For new cars, you may be able to secure a rate under 10% with a credit score of 600 or higher. For used cars, a good interest rate will be higher — up to 20% for some borrowers with subprime credit, though borrowers with prime or better credit could also see rates under 10%.

What credit score do I need to get the average rate or better?

According to Experian, the average credit score for new car loans was 751 in the first quarter of 2026. Used car loan borrowers had an average credit score of 682. To get the average rate, you'll need to be in either the prime or near prime range, which ranges from 601 to 780.

Why is my auto loan rate higher than average even with good credit?

Your credit score isn't the only factor lenders use to determine your rate. Your DTI, LTV and loan term — as well as the vehicle you buy — all play a role in the interest rate you receive.