Buying a car often requires more than choosing the right vehicle and making a down payment. If you plan to finance your purchase, understanding the average interest rate on a car loan can help you estimate monthly payments, compare lenders, and avoid paying more than necessary.
Car loan interest rates vary depending on whether you buy a new or used vehicle, your credit score, the loan term, the amount you borrow, and the lender’s requirements. Even a small difference in the interest rate can affect how much you pay over several years.
In the United States, Experian’s second-quarter 2026 auto finance data reported an average interest rate of 6.35% for new car loans and 11.19% for used car loans. Separately, Bankrate’s weekly rate survey reported an average rate of 7.13% for a 60-month new car loan and 7.53% for a 48-month used car loan on October 21, 2026. These figures measure different lending samples and loan terms, so they should not be treated as directly interchangeable.
This guide explains average car loan interest rates, the effect of credit scores, new versus used car financing, monthly payment examples, and practical ways to find a more competitive auto loan.
What Is the Average Interest Rate on a Car Loan?
The average interest rate on a car loan is the typical borrowing rate reported across a particular group of auto loans. It provides a reference point for evaluating an offer, but it does not guarantee the rate an individual borrower will receive.
According to Experian’s second-quarter 2026 data, the average rate on newly originated new car loans was 6.35%, while used car loans averaged 11.19%. These figures reflect loans made to borrowers with different credit profiles and financing circumstances.
Bankrate’s weekly survey of major banks and savings institutions reported different figures on October 21, 2026. Its average rate was 7.13% for a 60-month new car loan, 6.97% for a 48-month new car loan, 7.53% for a 48-month used car loan, and 7.36% for a 36-month used car loan.
The difference between these figures illustrates why you should check how a rate was calculated. An average based on completed loans includes borrowers who actually obtained financing, while a lender survey may focus on advertised or quoted rates for specified loan products.
Your personal rate may be lower or higher than these benchmarks. A borrower with excellent credit and a stable financial history may qualify for a more competitive offer than someone with a limited credit history or significant existing debt.
What Is a Good Interest Rate for a Car Loan?
A good car loan interest rate is generally competitive for your credit profile, vehicle type, and repayment term. It should also come with reasonable fees and manageable monthly payments.
For a borrower with excellent credit, a rate below the overall market average may be achievable, particularly when financing a new vehicle through a competitive lender promotion. A borrower with weaker credit may receive a substantially higher offer.
Consider the following average rates by credit score from Experian’s second-quarter 2026 data:
| Credit score category | New car loan APR | Used car loan APR |
|---|---|---|
| Super prime: 781–850 | 4.41% | 6.29% |
| Prime: 661–780 | 6.15% | 8.81% |
| Near prime: 601–660 | 9.71% | 13.93% |
| Subprime: 501–600 | 13.52% | 19.10% |
| Deep subprime: 300–500 | 16.11% | 21.62% |
These are averages for credit-score categories, not guaranteed offers. Lenders may use different scoring models, and credit score is only one factor in their decisions.
The table shows that creditworthiness can have a substantial effect on borrowing costs. A buyer in the super-prime category generally receives much more favorable rates than a buyer in the deep-subprime category.
When reviewing an offer, compare the annual percentage rate (APR), loan term, fees, and total amount repayable. A seemingly attractive monthly payment may conceal a longer repayment period and a higher total cost.
What Is the Average Interest Rate on a New Car Loan?
New car loans often have lower average interest rates than used car loans. Lenders may view new vehicles as less exposed to certain age-related risks, and manufacturers sometimes offer promotional financing on selected models to qualified buyers.
Experian’s second-quarter 2026 figures put the average new car loan rate at 6.35%. Bankrate’s October 21, 2026 survey reported 7.13% for a 60-month new car loan.
The rate you receive depends on your credit history, income, debt obligations, down payment, and the lender’s terms. Promotional financing may offer a lower rate, but it can be restricted to certain models, loan terms, or borrowers with qualifying credit.
Before accepting dealer financing, compare it with offers from banks, credit unions, and online lenders. Also compare the financing rate with any cash rebate you might give up by choosing a promotional offer.
A lower interest rate does not necessarily mean the entire vehicle purchase is cheaper if the selling price, fees, or other conditions differ.
What Is the Average Interest Rate on a Used Car Loan?
Used car loans tend to have higher average rates than new car loans. The vehicle’s age, mileage, condition, and estimated resale value can influence the lender’s assessment of risk.
Experian reported an average used car loan rate of 11.19% in the second quarter of 2026. Bankrate’s weekly survey showed 7.53% for a 48-month used car loan on October 21, 2026. The difference reflects distinct data sources and measurement methods, not necessarily a contradiction.
A used car may have a lower purchase price than a comparable new vehicle, but a higher interest rate can increase the total financing cost. Some lenders also impose restrictions on vehicle age, mileage, or loan-to-value ratio.
Before financing a used vehicle, review the car’s condition, maintenance history, and likely future expenses. A low monthly payment does not help much if major repairs create additional financial pressure.
Compare loan offers for the same vehicle price, down payment, and repayment term so you can evaluate the financing cost more accurately.
How Much Does Your Credit Score Affect Car Loan Interest Rates?
Your credit score is one of the most important factors lenders consider when setting an auto loan rate. It helps them estimate the likelihood that you will repay the loan according to the agreement.
Borrowers with stronger credit histories generally have access to more competitive rates. Those with late payments, high credit card balances, limited borrowing history, or previous defaults may receive higher rates or face stricter approval requirements.
Before applying for a car loan, review your credit reports for errors and address any issues you can reasonably correct. Making payments on time and reducing revolving debt may help strengthen your financial profile over time, although improvement is not guaranteed to produce a particular rate.
Also review your debt-to-income position. Even with a good credit score, substantial existing debt or unstable income can affect the lender’s assessment.
If your credit is less than ideal, compare several offers rather than accepting the first loan available. Be cautious of financing that relies on very long repayment terms to make an expensive vehicle appear affordable.
How Much Will a Car Loan Cost Each Month?
Your monthly car payment depends on the amount financed, interest rate, and repayment period. A longer term normally lowers the required monthly payment, but it can increase the total interest paid.
For illustration, consider a $30,000 car loan repaid over 60 months with no additional financed fees.
| Interest rate | Estimated monthly payment | Total interest over 5 years |
|---|---|---|
| 6.35% | $584 | $5,050 |
| 8.00% | $608 | $6,500 |
| 11.19% | $656 | $9,350 |
These are approximate calculations using fixed rates and regular monthly payments. Actual lender offers may include different APRs, fees, or payment structures.
In this example, the payment at 11.19% is approximately $72 higher each month than the payment at 6.35%. Across five years, that difference can add up to thousands of dollars.
A useful way to evaluate an offer is to calculate both the monthly payment and the total repayment amount. Make sure the payment fits your budget after accounting for insurance, fuel, maintenance, registration, and other ownership expenses.
What Factors Affect Car Loan Interest Rates?
Several factors influence the rate a lender offers.
Credit score: Strong credit can help you qualify for more competitive financing.
New or used vehicle: Rates often differ according to vehicle age, condition, and lender policies.
Loan term: Longer loans can have different rates and may increase the total interest paid, even if the monthly payment is lower.
Down payment: A larger down payment reduces the amount borrowed and may lower the lender’s risk.
Income and existing debt: Lenders may evaluate your ability to manage payments alongside your other financial obligations.
Lender and financing type: Banks, credit unions, online lenders, and dealerships may offer different rates and terms.
Market conditions: Broader interest-rate movements and lender funding costs affect the financing available to consumers.
Because these factors interact, it is important to compare the complete loan offer rather than focusing on only one number.
How to Get a Lower Car Loan Interest Rate
You can take several practical steps to improve your chances of finding competitive financing.
First, compare prequalification offers from multiple lenders. When available, prequalification can help you estimate possible rates without a full application, although the process and credit inquiry requirements vary.
Second, consider making a larger down payment if it does not leave you without adequate emergency savings. Borrowing less can reduce total interest and may improve the strength of your application.
Third, choose a loan term that balances affordability with total cost. A 72- or 84-month loan may make the payment look smaller, but it also keeps you in debt longer and can increase interest expenses. Longer terms may also increase the risk of owing more than the vehicle is worth.
Fourth, review your credit information and correct any errors before applying. If your financial situation allows it, reducing existing debt and establishing a consistent payment history may help you qualify for better terms later.
Finally, negotiate the vehicle purchase separately from financing. Ask for the total vehicle price, fees, and loan terms in writing. This makes it easier to compare offers fairly.
Is It Worth Refinancing a Car Loan?
Refinancing means replacing your current auto loan with a new loan, usually to obtain a different interest rate, payment, or repayment schedule.
It may be worth considering if your credit has improved, market rates have become more favorable, or the terms of your original loan were expensive. However, refinancing is not automatically beneficial.
Compare the new APR, remaining balance, fees, repayment term, and total interest cost. A lower monthly payment may simply result from extending the loan, which can increase the overall cost.
You should also check whether your existing loan has a prepayment penalty and whether the vehicle qualifies for the new lender’s requirements.
If you’re evaluating debt-management strategies more broadly, review these debt refinancing options. The same principle applies: compare the full cost and risk before replacing an existing financial obligation.
Frequently Asked Questions
Is 7% a good interest rate for a car loan in 2026?
A 7% rate may be competitive for some borrowers and loan types, but it depends on credit score, whether the vehicle is new or used, the repayment term, and available offers. Compare it with rates for similar borrowers and products.
Why are used car loan rates higher than new car rates?
Used vehicles can involve different resale, age, condition, and collateral risks. Promotional financing may also make certain new car loans more competitive. Actual rates vary by lender and borrower.
Can I get a car loan with bad credit?
Some lenders offer loans to borrowers with lower credit scores, but rates may be significantly higher and terms less favorable. Compare several offers, check the total cost, and avoid borrowing more than you can reasonably afford.
Does a longer car loan term lower the interest rate?
Not necessarily. A longer term may reduce the monthly payment by spreading repayment over more months, but the interest rate itself may be similar or higher. Longer terms often increase total interest costs.
Should I accept dealership financing?
Dealership financing can be convenient and may include promotional rates for eligible buyers. However, compare it with bank, credit union, and online lender offers before deciding. Review the APR, loan term, fees, and total repayment amount.
Final Thoughts
The average interest rate on a car loan depends on the vehicle, credit score, repayment term, lender, and broader market conditions. In the United States, Experian’s second-quarter 2026 data reported average rates of 6.35% for new cars and 11.19% for used cars, while weekly lender surveys reported different figures for specific loan products.
Use national averages as a reference, not as a promise of the rate you will receive. Compare multiple lenders, understand the total cost, and choose a repayment term that fits your budget without creating unnecessary financial pressure.
A well-chosen car loan should make the vehicle affordable over the entire repayment period—not just produce a monthly payment that looks manageable at first glance.