Average Auto Loan Interest Rates
Key Takeaways
- Average auto loan rates range anywhere from 5.25% to 21.55% based on your credit score.
- Your auto loan’s interest rate is primarily influenced by your credit score, but your state, loan term, vehicle age and vehicle type play a role as well.
- Annual percentage rates (APRs) include both the interest rate and the added costs that come with auto loans, so they’re often the rate most advertised by lenders.
Current Car Loan Interest Rates
The overall average car loan interest rate is 6.84% for new cars and 12.01% for used cars. However, there are several factors that can influence what APRs you get.
Click each link below to learn more about average car loan rates for the most influential factors:
Average Auto Loan Rates by Credit Score
Lenders group people into categories — sometimes called credit bands — based on credit-scoring models like FICO® and VantageScore. While other factors affect the auto loan interest rates you’re offered, the credit band your score falls into is among the most influential.
In the table below, you can compare used and new car loan rates for each credit score range on the FICO score model according to Experian:
| Credit Score Range | Average New Car Loan Interest Rate | Average Used Car Loan Interest Rate |
|---|---|---|
| 781 to 850 | 5.25% | 7.13% |
| 661 to 780 | 6.87% | 9.36% |
| 601 to 660 | 9.83% | 13.92% |
| 501 to 600 | 13.18% | 18.86% |
| 300 to 500 | 15.77% | 21.55% |
Average Auto Loan APRs by State
Rates for auto loans can be affected by the monetary policies in each state, which are mainly influenced by federal treasury rate changes. This causes market rates to fluctuate and differ between states. Below, you can compare recent average APRs for new and used cars within all U.S. states and Washington, D.C., according to Edmunds.
| State | Average New Car Loan APR | Average Used Car Loan APR |
|---|---|---|
| Alabama | 7.99% | 12.58% |
| Alaska | 7.6% | 11.03% |
| Arizona | 7.47% | 12.08% |
| Arkansas | 7.93% | 12.03% |
| California | 6.79% | 10.91% |
| Colorado | 6.38% | 10.48% |
| Connecticut | 5.95% | 10.3% |
| Delaware | 6.68% | 11.11% |
| Florida | 7.65% | 11.58% |
| Georgia | 8.34% | 12.8% |
| Hawaii | 7.21% | 12.55% |
| Idaho | 6.89% | 9.83% |
| Illinois | 6.66% | 11.39% |
| Indiana | 6.78% | 11.01% |
| Iowa | 6.81% | 10.23% |
| Kansas | 6.99% | 11.16% |
| Kentucky | 7.36% | 12.07% |
| Louisiana | 7.41% | 12.39% |
| Maine | 6.24% | 9.37% |
| Maryland | 7.08% | 11.03% |
| Massachusetts | 6.3% | 9.84% |
| Michigan | 6.39% | 10.67% |
| Minnesota | 5.16% | 10.17% |
| Mississippi | 7.83% | 13.49% |
| Missouri | 6.67% | 11.07% |
| Montana | 6.88% | 12.17% |
| Nebraska | 5.72% | 9.94% |
| Nevada | 7.35% | 13.04% |
| New Hampshire | 6.17% | 9.95% |
| New Jersey | 6.4% | 11.2% |
| New Mexico | 8.51% | 12.34% |
| New York | 6.63% | 10.37% |
| North Carolina | 7.06% | 11.41% |
| North Dakota | 6.43% | 11.79 |
| Ohio | 7.08% | 11.82% |
| Oklahoma | 7.25% | 11.55% |
| Oregon | 6.53% | 10.15% |
| Pennsylvania | 6.23% | 10.1% |
| Rhode Island | 6.73% | 10.09% |
| South Carolina | 7.74% | 12.39% |
| South Dakota | 6.75% | 11.46% |
| Tennessee | 7.52% | 11.36% |
| Texas | 7.54% | 12.26% |
| Utah | 6.33% | 9.8% |
| Vermont | 6.51% | 9.08% |
| Virginia | 6.66% | 10.95% |
| Washington | 6.1% | 9.38% |
| Washington, D.C. | 7.63% | 11.03% |
| West Virginia | 7.24% | 12.23% |
| Wisconsin | 5.54% | 9.49% |
| Wyoming | 6.81% | 10.78% |
Average Auto Loan Interest Rates by Vehicle Type
The type of vehicle you choose to finance can influence the rates you receive. Vehicles have different prices and demands which cause fluctuations in the interest you’re charged throughout an auto loan’s term. The chart below showcases average rates for car loans for each vehicle type.
| Vehicle Type | Average New Car Loan APR | Average Used Car Loan APR |
|---|---|---|
| Electric Vehicles | 4.32% | 10.1% |
| Trucks | 7.12% | 10.39% |
| SUVs | 6.44% | 10.95% |
| Sedans | 8% | 12.28% |
Average Auto Loan Interest Rates by Loan Term
Lenders see longer auto loan terms as riskier, since there’s more time for the borrower to miss payments. So, in most cases, interest rates increase as the term increases and vice versa. Below, you’ll find average new and used car loan rates by loan term according to Experian.
| Loan Term Range | Average New Car Loan Interest Rate | Average Used Car Loan Interest Rate |
|---|---|---|
| 1 to 48 months | 3.87% | 12.05% |
| 49 to 60 months | 5.04% | 10.93% |
| 61 to 72 months | 6.86% | 12.8% |
| 73 to 84 months | 9.07% | 11.53% |
| 85 months or more | 9.22% | 9.81% |
What Is a Good Auto Loan Interest Rate?
A good auto loan interest rate is anything that is below average for your credit score profile. For example, if you’re looking for a new car and have a score of 730, a great rate for you would be anything below 6.87%. So when you are getting rate quotes from lenders, be sure to compare your quotes to the averages for your score to ensure you get the best deal.
What Factors Affect Auto Loan Rates?
Auto lenders set interest rates based in part on the likelihood of repayment. The riskier the loan is for the lender, the higher the interest rate will probably be. Several factors indicate risk to lenders and can affect the interest rate you get on a loan.
Here are the most critical factors used to determine your rates:
- Credit score: Your credit score is the factor that carries the most weight. The lower your score is, the higher your interest rate is likely to be.
- Credit history: Your credit score is part of your credit history, but it isn’t all of it. Lenders look at a detailed credit report that includes information about how much of your available credit you’re using and whether you’ve missed monthly payments.
- Loan term: Car loans generally have terms ranging from 12 to 84 months. Longer terms typically translate to lower monthly payments, but they also tend to come with higher interest rates.
- Market rates: The average market rate is a significant factor in the rates you get. Lenders adjust their rates based on what they pay to borrow money, so you’ll see higher rates if the average interest rate goes up.
- Loan-to-value (LTV) ratio: The LTV ratio expresses how much of a car’s value is borrowed. For example, if you want to borrow $20,000 for a car that’s worth $40,000, that’s an LTV ratio of 50%. The lower the LTV ratio is, the lower your interest rate is likely to be.
- Down payment: Your down payment, whether in cash or in the form of a trade-in, affects the LTV ratio. You can find zero-money-down car loans, but you’ll typically get better interest rates by making a larger down payment.
- Debt-to-income (DTI) ratio: Your DTI ratio is the amount you have to pay in debt obligations every month compared to your monthly income. While your debt factors into your credit score, lenders will also look at your DTI ratio to see how much you can realistically afford to pay. The lower your ratio of debt payments to income, the lower your auto loan rates are likely to be.
- Vehicle’s age and condition: Lenders typically have age, mileage and condition restrictions for financed vehicles, and they adjust rates based on those factors. Loans for older, higher-mileage vehicles or cars in bad condition come with higher interest rates.
How To Get Lower Interest Rates on Your Auto Loan
If you’re looking for the best auto loan rates, we’ve provided some key tips and resources to get you started.
Below you can learn about the best companies and rates for different auto loan categories:
Increase Your Down Payment
Putting more money down reduces the LTV ratio on your auto loan, which may get you a better interest rate.
Get a Discount
One of the most common discounts in the automotive finance industry is for setting up automatic payments, which can reduce your interest rate by as much as 0.5%.
Get a Co-Signer
If you have bad credit, getting a friend or family member with a good credit score to cosign a loan with you might get you a lower rate.
Look for a Newer Car
Most lenders adjust their rates based on the age of a car. If you can find a newer car within your price range, you may get better auto loan interest rates for your credit score.
Choose a Shorter Loan Term
Longer loan terms have lower monthly payments, but they usually come with higher interest rates. If you can afford the higher payments that come with a shorter loan term, you’ll likely get a lower interest rate and pay less interest over the life of the loan.
Raise Your Credit Score
Having a higher credit score will help you get the best rates when you go to refinance your vehicle. Read our guide to see how you can increase your credit score.
Refinance Later
If you’re stuck with a high interest rate due to a poor credit score, you may benefit from refinancing your auto loan in the future. You can take the interest rate available to you now and make timely payments to improve your credit score, which will eventually put you in a better position with lenders.
Auto Loan Interest Rates: FAQ
Below are some frequently asked questions about average car loan interest rates:
A good interest rate for a car loan is typically below 5.25% for new cars and 7.13% for used vehicles. However, the best rate is unique to the borrower so it’s best to look at the average interest rates for your credit score category to know if you’re getting a good deal.
Having a 700 credit score puts you in the “prime” category for borrowing. According to Experian, the average rates for this category are 6.87% for new car loans and 9.36% for used car loans.
A 640 credit score puts you in the “near prime” category of borrowers, which is generally good enough to get a loan to buy a car. However, while you’ll likely be approved for an auto loan, you won’t get the best rates.
Generally speaking, the higher your FICO score is, the more likely you are to be approved for a loan and the lower your interest rate will be. However, some providers offer loans to people with low credit scores, and some even specialize in bad credit car loans. If you have a low FICO score, you should expect high interest rates.
Our Methodology:
Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best auto loan companies. We collected data on dozens of loan providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the companies that scored the most points topping the list.
Here are the factors our ratings take into account:
- Industry Standing (30% of total score): Our research team considers ratings from industry experts and each lender’s years in business when giving this score.
- Rates and Discounts (25% of total score): Auto loan providers with low APRs, good discount opportunities and high loan amounts score highest in this category.
- Availability (20% of total score): Companies that cover a variety of circumstances are more likely to meet consumer needs.
- Loan Details (15% of total score): We look at auto lenders’ financing amount limitations, available loan terms and the types of auto loans they offer.
- Customer Service (10% of total score): This score is based on customer satisfaction ratings and transparency. We also consider the responsiveness, friendliness and helpfulness of each loan company’s customer service team based on our shopper analysis.
Our credentials:
- 295+ hours researched
- 20+ companies reviewed
- 2,000+ consumers surveyed
*Data accurate at time of publication.
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