As of the second quarter of 2024, the average car loan interest rate for a new car is 6.84%. The average interest rate for a used car is 12.01%. This is across all credit scores and loan terms.
However, the averages change quite a bit when broken down by credit score, loan term, and new vs. used car loans. Here’s what auto loan interest rates you can expect, why they vary, and what you can do to get a better interest rate for your next car loan.
Key Points
• Car loan interest rates vary significantly based on credit score. Higher credit scores typically receive lower rates, while lower scores often face higher rates.
• Borrowers with scores above 700 (prime) can secure lower rates, sometimes below 5.00%, while subprime borrowers (scores below 600) may see rates over 10.00%.
• Higher interest rates increase monthly payments and total loan cost, making a good credit score valuable for affordable car financing.
• Interest rates on loans for used cars are generally higher than for new cars, as lenders see more risk in financing older vehicles.
• Improving your credit score, shopping around for rates, and considering a cosigner with good credit can help you secure a lower car loan rate.
Average Used Car Interest Rates by Credit Score
The average auto loan interest rates based on credit score, collected by Experian in the Q2 2024 “State of the Automotive Finance Market,” are as follows:
| Credit score | New car interest rate | Used car interest rate |
|---|---|---|
| Super prime (781 to 850) | 5.25% | 7.13% |
| Prime (661 to 780) | 6.87% | 9.36% |
| Near prime (601 to 660) | 9.83% | 13.92% |
| Subprime (501 to 600) | 13.18% | 18.86% |
| Deep subprime (300 to 500) | 15.77% | 21.55% |
Recommended: What Is the Starting Credit Score?
Factors That Affect Auto Loan Interest Rates
It helps to understand what factors affect auto loan interest rates. If you understand these, you may be able to make choices that can secure a lower APR on your next car.
Credit Score
Your credit score is a key factor in what interest rate you’ll qualify for on an auto loan. The better your score, the better interest rate you can get.
Lender
Lenders play a big role in auto loans, largely due to the financing incentives offered on new car loans. If you’re able to take advantage of zero or low-interest financing, that might be the way to go. Just be sure to negotiate the price of the car before you talk payments with the dealer.
Amount Borrowed
A larger down payment means you’ll borrow less and possibly qualify for a more favorable interest rate.
Length of the Loan
Shorter loans have lower interest rates for new vehicles, but that doesn’t always hold true for used car interest rates. According to Experian data for 2024, here’s the average car loan interest rate based on the length of the loan:
| Term | New car interest rate | Used car interest rate |
|---|---|---|
| Up to 48 months | 3.87% | 12.05% |
| 49 to 60 months | 5.04% | 10.93% |
| 61 to 72 months | 6.86% | 12.80% |
| 73 to 84 months | 9.07% | 11.53% |
| 85+ months | 9.22% | 9.81% |
Economic and Market Conditions
Economic and market conditions affect what interest rates are available. When the Federal Reserve Board raises interest rates, those costs are usually passed on to the consumer (you). You’ll see higher interest rates when this happens.
If there’s a high demand for cars, such as in the years following the COVID-19 pandemic, you may see higher rates and fewer incentives, as well.
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How to Get a Better Auto Loan Interest Rate
If you’re looking for a better auto loan interest rate, there are a few strategies you’ll want to try:
• Work on your credit score. If you have time, make some moves to build your credit score. Pay down debt, get your payments on autopay, ask for a credit line increase, dispute inaccuracies, and start regularly checking your credit.
• Look for an incentive. If you have excellent credit, you may find a dealership that offers 0% APR financing for certain models they sell. Just be careful that you’re getting a good deal on the car, too.
• Opt for a shorter loan term. You might see lower interest rates on shorter loan terms, such as those that are 48 months or shorter.
• Put down a larger down payment. If you’re able to put down a larger down payment, you might see a lower interest rate.
• Shop around for a lender. Compare auto loan interest rates for your credit score at banks, credit unions, and online lenders to see which is best for your situation.
Recommended: What Credit Score Do You Need to Buy a Car in 2024?
How Often Do Auto Loan Rates Change?
Auto loans rates change with fluctuating market conditions. If the prime rate jumps, you’ll see auto loan interest rates jump for new and used car loans.
Incentives for auto loan rates can change with little notice at the dealership, so if you see a 0% interest rate, consider snagging it before the promotion expires.
How to Use Average Car Interest Rates
Average car interest rates can help show you what to expect when you get a car loan of your own. If you don’t see a rate close to the average, you may want to continue shopping around.
Average car interest rates do change based on your credit score, loan term, car make and model, dealer incentives, and whether or not you’re buying a new or used car.
Recommended: What Should Your Average Car Payment Be?
Where Are Auto Loan Rates Heading?
Auto rates are tied to the federal funds rate. When the Federal Reserve Board votes to cut rates, you may see lower interest rates on auto loans. But there are other factors lenders consider — such as delinquencies — before lowering their rates.
Car valuation company Kelley Blue Book expects to see lower APRs on auto loans by the end of 2024. They report a 1% decrease in your auto loan APR results in a 3% decrease in your monthly payment.
Ways to Get a Better Car Loan Rate
The best way to get a better car loan rate is to learn how to build credit. There’s a stark difference between borrowers with poor credit scores and those with optimal credit scores. Here’s a comparison of the average car loan interest rate by credit score for the very lowest scores to the very highest:
| New car loan APR | Used car loan APR | |
|---|---|---|
| Super prime (781 to 850) | 5.25% | 7.13% |
| Deep subprime (300 to 500) | 15.77% | 21.55% |
With poor credit, you’ll most likely pay the highest interest rate available. Even worse, you may not be able to get a loan. Only 0.38% of new car loans are issued to borrowers with a deep subprime credit score. Start monitoring your credit score if you’re worried about getting approved for an auto loan.
The Takeaway
You can use the average car loan interest rate to your advantage. Knowing what it is and what your credit score is can arm you with the knowledge to negotiate for the best rate based on your credit score.
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FAQ
What APR will I get with a 700 credit score for a car?
A 700 credit score is considered prime and will receive some of the best APR offers. The average interest rate for someone buying a new car with a credit score in the 700 range is 6.87%, according to Experian’s “State of the Automotive Finance Market.” For a used car, the average interest rate is 9.36%.
What car loan interest rate can I get with an 800 credit score?
An 800 credit score is considered super prime and qualifies for the best APR offers. The average interest rate for someone buying a new car with a credit score in the 800 range is 5.25%. For a used car, the average APR is 7.13%.
What is a good APR for a 72 month car loan?
The average APR for a 72 month car loan is 6.86% for a new car and 12.80% for used. If you’re able to get a better APR than the average, you may consider that good.
Is 7% APR good for a car loan?
A 7.00% APR may be a good APR for a car loan, but it depends on your credit, loan term, and whether you’re buying a used or new car. If you have excellent credit and are seeking a new car loan, 7.00% is higher than the average 5.25% APR you could get. But if you’re buying a used car, 7.00% is a great rate.
What APR is too high for a car?
An APR is too high when it’s over the average APR for your credit score. The APR for people with poor credit averages 15.77% for new cars and 21.55% for used cars, so anything over those amounts would be considered high.
Can you negotiate APR on a car?
Yes, you can negotiate the APR (annual percentage rate) on a car loan. Start by researching current rates based on your credit score and prequalifying with different lenders. Dealers may match or beat offers to close the sale, so leverage competing rates to negotiate a better APR.
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