A good car loan rate is generally below 6% for new cars and below 8% for used cars for borrowers with good credit (690+). The national average is around 7% for new and 11% for used — so anything meaningfully below those averages is favorable.
Car loan rates by credit score — new vehicles
Your credit score is the single biggest factor in your auto loan rate. Here's how new car loan rates typically break down across credit tiers in 2026:
Typical new car loan APR by credit score — 2026
| Credit score | Tier | Typical APR | Monthly payment* |
|---|---|---|---|
| 720+ | Excellent | 5% – 7% | $472 – $495 |
| 690–719 | Good | 6% – 8% | $483 – $507 |
| 660–689 | Fair | 8% – 11% | $507 – $543 |
| 620–659 | Poor | 11% – 15% | $543 – $594 |
| Below 620 | Subprime | 15% – 20%+ | $594 – $660+ |
*Based on $25,000 loan, 60-month term.
Car loan rates by credit score — used vehicles
Used car loans consistently carry higher rates than new car loans — typically 2 to 4 percentage points higher — because used vehicles are considered higher-risk collateral for lenders. A used car depreciates faster and is harder to value precisely.
Typical used car loan APR by credit score — 2026
| Credit score | Tier | Typical APR | Monthly payment* |
|---|---|---|---|
| 720+ | Excellent | 6% – 8% | $386 – $405 |
| 690–719 | Good | 8% – 10% | $405 – $424 |
| 660–689 | Fair | 11% – 14% | $435 – $465 |
| 620–659 | Poor | 14% – 18% | $465 – $507 |
| Below 620 | Subprime | 18% – 25%+ | $507 – $594+ |
*Based on $20,000 loan, 60-month term.
The difference between excellent and poor credit on a $25,000 new car loan is roughly $100–$165 more per month and over $6,000–$10,000 in extra interest over a 5-year term. Use the Auto Loan Calculator to see exactly what any rate costs you on your actual vehicle price.
Loan term — how length affects your rate and total cost
Longer loan terms lower your monthly payment but increase total interest paid and typically come with slightly higher rates. Here's what the same $30,000 car loan looks like at different terms:
$30,000 car loan at 7% APR — cost by loan term
| Loan term | Monthly payment | Total interest | Total cost |
|---|---|---|---|
| 36 months | $927 | $3,372 | $33,372 |
| 48 months | $717 | $4,416 | $34,416 |
| 60 months | $594 | $5,640 | $35,640 |
| 72 months | $511 | $6,792 | $36,792 |
| 84 months | $452 | $7,968 | $37,968 |
A 36-month loan costs $3,372 in interest vs $7,968 for 84 months — more than double — on the same vehicle. Financial advisors generally recommend keeping auto loan terms to 60 months or less. Terms of 72 or 84 months also carry the risk of being "underwater" — owing more than the car is worth — for much of the loan's life.
Dealer financing vs bank vs credit union
Get pre-approved before you go to the dealership. Walking in with a pre-approval letter from a bank, credit union, or online lender gives you a real rate to compare against whatever the dealer offers, and it removes the rate negotiation from the car price negotiation — two separate conversations is always better than one.
Credit unions consistently offer some of the lowest auto loan rates available, often 1–2% below banks for the same credit profile. If you're a member of a credit union, check their rates first. Online lenders like LightStream and PenFed Credit Union are also worth comparing.
Manufacturer financing promotions (0% APR for 60 months, etc.) can beat outside rates, but usually require excellent credit and may come with a higher vehicle price or limited negotiation room.
When to refinance your car loan
Auto loan refinancing is one of the most overlooked savings opportunities in personal finance. It makes sense when your credit score has improved since you originally financed, when you financed through a dealership at a high rate, or when market rates have dropped. Even a 2% reduction on a $25,000 balance with 3 years remaining saves roughly $900 in interest.
The process is straightforward — you apply with a new lender, they pay off your existing loan, and you start making payments at the new, lower rate. Most refinances can be completed in a few days with no impact on your ability to drive the car during the process.
See your exact monthly payment
Enter your vehicle price, down payment, trade-in, and rate to see your real monthly payment and total interest.
Use the Auto Loan Calculator →Could you get a lower rate on your current car loan?
Compare auto loan and refinance rates from multiple lenders — free, no commitment, no credit impact to check.
Compare Auto Loan Rates →Common questions
What is a good interest rate for a car loan?
Below 6% for new cars and below 8% for used cars is generally considered good for borrowers with good credit (690+). The national average is around 7% for new and 11% for used.
What is the average car loan interest rate?
Approximately 7% for new cars and 11% for used cars as of 2026. Rates vary significantly by credit score, term, and vehicle type. Use the Auto Loan Calculator to see what any rate costs on your specific purchase.
Does my credit score affect my car loan rate?
Yes, significantly. Excellent credit (720+) typically qualifies for 5–7% on new cars. Fair credit (620–659) often sees 11–15%. The difference can be $100+ per month and thousands in total interest.
Is it better to finance through a dealer or a bank?
Get pre-approved through a bank, credit union, or online lender before visiting a dealer. This gives you a rate to compare against the dealer's offer. Credit unions often have the lowest rates. Manufacturer promotions can beat outside rates but usually require excellent credit.
When should I refinance my car loan?
When your credit score has improved, when you originally financed at a high dealer rate, or when market rates have dropped. Even a 2% reduction on a $25,000 balance saves hundreds in interest. The process typically takes just a few days.