Auto Loan Rates: Used, New, and Refinance

Most car owners finance their vehicles. According to recent research, nearly 80% of car owners used financing to purchase new vehicles in 2023, while almost 38% used financing to purchase used vehicles. 

Borrowers can expect to pay interest charges, which can add up throughout the repayment term. The good news is that you might secure a lower interest rate by comparing offers from multiple lenders. 

Here are the average interest rates for used, new, and refinanced car loans, as well as the steps you can take to get the best deal on an auto loan. 

Average car loan rates 

Car loan rates vary depending on the borrower’s credit score. If you have a higher score, you can typically expect lower rates. The reverse is also true—borrowers with lower scores pay higher rates. As a borrower, you want to secure the most competitive loan terms. 

Here are the average auto loan rates based on credit scores. 

Credit rating	Credit score	Avg. new car loan rate (APR)	Avg. used car loan rate (APR)
Super prime	781 – 850	5.64%	7.66%
Prime	661 – 780	7.01%	9.73%
Near prime	601 – 660	9.6%	14.12%
Subprime	501 – 600	12.28%	18.89%
Deep subprime	300 – 500	14.78%	21.55%

How have car loan rates changed over time?

Understanding the historical data can help put current rates in perspective. Rates are higher than they’ve been over the last two decades but still much lower than average. 

The average auto loan APR (annual percentage rate) for the last ten years was around 4%. In 2021, rates started to increase and have continued to increase by about 1% each year.

But even though interest rates seem high right now, they’ve been higher throughout history. In 1981, the average rate for a 48-month auto loan was 17.36%. 

Auto loan rates by lender

Lenders offer different interest rates, which vary based on your credit score and other financial factors. Here are the current interest rates for several of the most popular lenders in the industry.

Auto loan lender	New car loan rate (APR)	Used car loan rate (APR)
LightStream	7.65% – 25.99% with autopay	7.69% – 25.99% with autopay
AutoPay	5.69% – 23.80%	5.69% – 23.80%
Capital One	Starting at 6.49%	Starting at 6.49%
Bank of America	Starting at 6.39%	Starting at 6.79%
Navy Federal Credit Union	Starting at 4.54%	Starting at 5.44%
Chase	Starting at 7.64%	Starting at 8.84%

How to choose an auto loan lender

Erin Kinkade

CFP®

First, understand your credit score and identify lenders who will accept that range. Then, narrow down at least three lenders that meet your needs and have the most favorable rates and terms for your financial condition.

Current auto refinance rates

If you already have an auto loan, you can refinance it to create a new loan with better repayment terms. Borrowers often refinance with a different lender, but you can also check with your current lender to see if you qualify for a lower rate. 

When you refinance a loan, you can expect to qualify for the same interest rates as other auto loans from the lender. For example, imagine the lender offers interest rates starting at 9% for used car loans. Refinance interest rates for a used car would also begin at 9%.

Some lenders offer different rates for refinancing new and used cars. If you have a new car, the refinance interest rates are often slightly lower. To qualify for the new car refinance rate, you typically need to own a vehicle that is less than two years old and has under 30,000 miles.

What variables affect auto loan rates?

Even though you can’t control the average interest rates, you can control other aspects that impact your loan terms. Your credit score, lender, and down payment amount affect your interest rate. 

Here’s what you need to know about the variables that impact your auto loan rate.

Credit score

Your credit score is a snapshot of your history as a borrower. Your payment history, debt amount, credit history length, and new account applications impact your score. Building a good credit score takes time, but it’s worthwhile since it helps you save money on loans and qualify for better terms. 

How credit score affects your car loan rates

Lenders use your credit score to determine whether you’re a responsible borrower who will repay your loan on time and in full. A high credit score indicates that you are a trustworthy borrower, and as a result, lenders charge you less to borrow money. 

A low score, on the other hand, indicates that you are a riskier borrower, which might cost the lender more money. To decrease the loan risk, the lender charges a higher interest rate. 

Example

Imagine shopping for a new car loan as a super prime borrower. You have excellent credit and qualify for a $30,000 loan with a 48-month repayment term and a 5% interest rate. Your monthly payment is $691, with total interest charges of $3,162. 

But if you’re shopping for the same loan as a subprime borrower, the lowest interest rate you can get is 12.5%. Your monthly payment is $796, and the total interest charges are $8,275. Your credit score directly impacts your interest rate, affecting the loan’s cost. 

Lender you choose

The lender you select also affects your interest rate. Each lender has different underwriting requirements, which assess risk. Some lenders can offer lower rates and no fees. Other lenders have stricter underwriting or higher operating costs that they recoup by charging higher interest rates. 

How lenders affect your car loan rates

The type of lender you work with can also impact your car loan rate. For example, not-for-profit credit unions might have more competitive rates since they are member-owned. Other lenders that cater to bad-credit borrowers might charge additional fees or higher rates to offset some of the risk. 

Example

Prequalifying for auto loans allows you to compare rates from several lenders. Prequalification typically requires a soft credit pull, which does not impact your credit score. It will enable you to review sample loan offers and terms. If you prequalify with multiple lenders, you can compare offers and pick the best deal. 

For example, imagine that one lender offers an interest rate of 12% and charges a 1% origination fee for a $25,000 loan. Another lender offers the same interest rate of 12% but does not have an origination fee. You can save $250 by choosing the second lender.

Down payment

Providing a down payment can often help you obtain a lower interest rate. The more you pay for the vehicle upfront, the less risk you pose to the lender, so it might be more likely to offer lower rates. 

The other perk of a down payment is that it reduces your loan amount, which decreases the total interest you pay. 

How down payments affect your car loan rates

Down payments are another way to show that you are a responsible borrower, especially if you have a low credit score. Lenders often offer lower interest rates when borrowers provide larger down payments because this offsets some risk. 

Any down payment is helpful, but most experts recommend a 20% down payment. If you can’t afford that size, contribute what you can to the auto loan and check with your lender about whether it can reduce your interest rate. 

You also may be able to trade in your current vehicle to count toward a down payment.

Example

Imagine you want to buy a $40,000 car. You finance the entire amount and qualify for an 8% interest rate with a 60-month repayment term. Your monthly payments are $811, and the total interest charges are $8,663. 

But imagine you have the same loan and decide to provide a 20% down payment of $8,000. You get a slightly lower interest rate as a result. Your new loan is $32,000 with an interest rate of 7.5%. The monthly payments are $641, and the total interest charges are $6,473.  

Ask the expert

Erin Kinkade

CFP®

Typically, dealer financing has higher interest rates, but dealers will accept lower credit scores. If you have good to excellent credit, I recommend using a bank because they typically offer lower rates—and it’s even better if you have an existing relationship with the bank.

Recap of featured lenders

Auto loan lender	New car loan rate (APR)	Used car loan rate (APR)
LightStream	7.65% – 25.99% with autopay	7.69% – 25.99% with autopay
AutoPay	5.69% – 23.80%	5.69% – 23.80%
Capital One	Starting at 6.49%	Starting at 6.49%
Bank of America	Starting at 6.39%	Starting at 6.79%
Navy Federal Credit Union	Starting at 4.54%	Starting at 5.44%
Chase	Starting at 7.64%	Starting at 8.84%