The average interest rate on a car loan is generally higher for used vehicles than new vehicles. A new car loan in the first quarter of 2025 had an average interest rate of 6.73% compared with a rate of 11.87% for used car financing, data show.
You may have a good interest rate if your car loan’s annual percentage rate (APR) is under 6.73% on a new car or below 11.87% on a used car. The average APR for car loan financing may be higher when the Federal Reserve raises its target range for the federal funds rate and lower when the Fed cuts its benchmark target rate.
Consumers with good credit scores tend to qualify for lower interest rates than consumers with bad credit scores. Below we highlight how your personal creditworthiness can impact your average car loan interest rate.
Key Points
• As of 2025, the average car loan interest rate is 6.73% for new cars and 11.87% for used cars.
• Your credit score, loan term, and the type of car (new or used) are key factors that influence the interest rate you will be offered.
• Higher credit scores typically result in lower interest rates, as lenders view borrowers with good credit as less risky.
• Longer loan terms often come with higher interest rates, but they can lower monthly payments. Shorter terms may have lower rates but higher monthly payments.
• Comparing offers from multiple lenders can help you find the best interest rate and terms for your car loan.
What Is an Interest Rate?
An interest rate is the percentage amount a lender charges you to borrow money. The interest rate and upfront fees are usually expressed as an annual percentage rate (APR). Auto loans can have fixed rates of interest as low as 0%. A 0% APR car loan is the best interest rate that some lenders may offer to borrowers with good or excellent credit.
If 0% APR is the best rate, what is a good interest rate on a car? A good interest rate on a car is one that’s better than the average APR for car loan financing. As mentioned earlier, you may have a good interest rate if your APR is under 6.73% on a new car loan or below 11.87% on a used car loan.
The average car loan interest rate stood at 6.73% for new vehicles in the first quarter of 2025, according to Experian®. Meanwhile, the average used car loan interest rate stood at 11.87%. Lenders may charge simple interest or precomputed interest, but auto loan interest rates in most cases are based on a simple interest formula.
What Is APR?
APR is the annual percentage rate on a loan. APR refers to all finance charges on a loan, which can include interest and fees. A 0% APR loan is a loan that doesn’t charge interest or upfront fees.
Interest vs APR
Interest is a finance charge on a loan, while APR represents the total cost of all finance charges. APR generally highlights your total borrowing costs because it includes interest and upfront fees.
Your interest rate and overall APR can have a big impact on how much money you pay over the life of a loan.
For example, if you took out a five-year $25,000 loan to buy a new car with a 2.5% interest rate, you’d end up paying $1,621.04 in interest over the life of the loan. If you took out the same loan but with a 6.5% interest rate, you’d pay $4,349.22 in interest over the life of the loan.
Because your interest rate can have such a big effect, it’s important that you get the best rate you can.
Recommended: Guide to Getting a Low APR on a Car Loan
What Determines the Average Auto Loan Rate?
The interest rate a lender may charge for a car loan will depend on the borrower’s credit score, loan amount, and loan term, among other factors mentioned below:
Credit Score
Your credit score is a numerical expression of your credit history — a chronicle of the debts you carry and the payments you’ve made or missed. The average car loan interest rate by credit score shows borrowers with good credit generally get better rates of interest than borrowers with bad credit.
Credit scores typically range from 300 to 850, with 850 being the best. Borrowers had an average credit score of 756 for new car loans in the first quarter of 2025, data show.
If you have subprime or deep subprime credit scores between 300 to 600, you may pay higher rates of interest than borrowers with prime or super prime credit scores between 661 and 850.
Borrowers with bad credit scores between 300 and 500 had an average rate of 15.81% for new car loan financing in Q1 2025 compared with 5.18% for consumers with excellent scores between 781 and 850, according to Experian’s State of the Auto Finance Market report.
Recommended: How to Check Your Credit Score Without Paying
Term Length
Car loan term lengths can impact the interest rate you get and the finance charges you pay. A longer repayment term generally offers lower monthly payments, but long-term auto loans may charge higher rates of interest than car loans with shorter terms.
Car loans may charge daily simple interest, so your total interest costs may be lower with a shorter term. Paying interest over the life of a loan can add up.
A 144-month auto loan, for example, can cost significantly more than a 72-month car loan. If you get a $100K car loan with a 6% interest rate and 12-year term, you may pay $40,522.43 in total interest over 144 months, while you may pay up to $19,324.79 in total interest over six years if you get similar financing on a 72-month car loan.
Long-term auto loans can help you finance the purchase of luxury or ultra premium cars. Lenders of exotic car financing may offer 144-month or 180-month car loans at higher rates of interest than 72-month car loans issued by a bank.
Down Payment
Making a down payment on a car can reduce the amount of money you need to borrow when financing a car purchase. Making a larger down payment on a car may prevent you from getting an upside down car loan. Your car loan is upside down or underwater if your auto loan debt is greater than the value of your car.
A larger down payment can minimize your borrowing costs and monthly payment. A higher down payment can also bolster your equity stake in the car and help you avoid going underwater. A lender calculating car loan APR may offer you a lower interest rate based upon the size of your down payment.
New vs Used Car
The average used car loan rate is typically higher than the average new car loan rate. Cars generally depreciate in value as they age, so a used car is typically less reliable and less valuable than a new version of the same make and model.
Lenders may view depreciation as a risk factor, and this may explain why the average interest rate on a used car loan is typically higher than the average interest rate on a new car loan.
Of course, the best interest rate on a car loan is 0%. Certain lenders may offer 0% APR on a new car loan, but lenders may not be willing to offer 0% APR on a used car loan. Finance charges add to the principal cost of your loan.
Recommended: Should I Buy a New or Used Car in 2025?
Amount Borrowed
The amount of car loan financing you borrow can influence the interest rate you get. Borrowing $250,000 to buy an exotic car may give you a higher interest rate than a basic car model, for example.
View the table below for a more detailed look at the relationship between credit score, terms, and new car loan rates using Experian data from Q1 2025:
| Borrower risk tier | Credit score range | Average loan term (months) | Average loan rate |
|---|---|---|---|
| Deep subprime | 300 to 500 | 72.46 | 15.81% |
| Subprime | 501 to 600 | 73.89 | 13.22% |
| Nonprime | 601 to 660 | 74.76 | 9.83% |
| Prime | 661 to 780 | 71.87 | 6.70% |
| Super prime | 781 to 850 | 64.25 | 5.18% |
How Average Interest Rates Vary for New and Used Vehicles
One of the biggest factors in determining the interest rate on car loans is whether you’re buying a new or used car.
Used car financing often comes with higher interest rates because used cars represent more risk to lenders. As mentioned earlier, a used car is generally older, less reliable, and not as valuable as a new version of the same make and model.
In the first quarter of 2025, the average used car loan interest rate stood at 11.87%, with the loan term averaging 67.22 months.
To compare, the average car loan interest rate for new cars stood at 6.73%, with an average repayment term of 68.63 months.
Average Interest Rates by Term Length
As mentioned earlier, car loan term lengths can impact the interest rate you get and the finance charges you pay. A longer repayment term generally offers lower monthly payments but could charge you higher rates of interest than car loans with shorter terms.
Borrowers with excellent credit may favor car loans with shorter terms. Super prime borrowers had an average term of 64.25 months and average rate of 5.18% on new car loans in the first quarter of 2025, data show.
Borrowers with fair credit may favor car loans with longer terms. Borrowers with near-prime credit scores between 601 and 660 had an average term of 74.76 months and average rate of 9.83% on new car loans in Q1 2025, according to Experian.
Average Auto Loan Rates for Excellent Credit: 781 to 850
Here’s a table showing average loan rates for borrowers in the super prime or excellent credit score range, according to recent Experian and RateGenius data:
| Risk category | Credit score | Average new car loan rate | Average used car loan rate | Best auto refinance rate (June 2025) |
|---|---|---|---|---|
| Super prime | 781–850 | 6.70% | 6.82% | 4.67% (credit score 750+) |
Average Auto Loan Rates for Good Credit: 661–780
Here’s a table showing average loan rates for borrowers in the prime or good credit score range, according to recent Experian and RateGenius data:
| Risk category | Credit score | Average new car loan rate | Average used car loan rate | Best auto refinance rate (June 2025) |
|---|---|---|---|---|
| Prime | 661–780 | 6.70% | 9.06% | 6.48% (credit score 700–749) |
Average Auto Loan Rates for Fair Credit: 601–660
Here’s a table showing average loan rates for borrowers in the nonprime, near prime, or fair credit score range, according to recent Experian and RateGenius data:
| Risk category | Credit score | Average new car loan rate | Average used car loan rate | Best auto refinance rate (June 2025) |
|---|---|---|---|---|
| Nonprime | 601–660 | 9.83% | 13.74% | 8.03% (credit score 640–699) |
Average Auto Loan Rates for Bad Credit: 501–600
Here’s a table showing average loan rates for borrowers in the subprime or bad credit score range, according to recent Experian and RateGenius data:
| Risk category | Credit score | Average new car loan rate | Average used car loan rate | Best auto refinance rate (June 2025) |
|---|---|---|---|---|
| Subprime | 501–600 | 13.22% | 18.99% | 11.84% (credit score under 640) |
Average Auto Loan Rates for Deep Subprime Credit: 300–500
Here’s a table showing average loan rates for borrowers in the deep subprime risk category as of Q1 2025, according to Experian data:
| Risk category | Credit score | Average new car loan rate | Average used car loan rate | Best auto refinance rate (June 2025) |
|---|---|---|---|---|
| Deep subprime | 300–500 | 15.81% | 21.58% | undefined |
Recommended: What Is Considered a Bad Credit Score?
How to Get a Good Interest Rate on Refinancing an Auto Loan
Here are some tips that may help you get a good auto refinance rate:
Talking to Your Lender
The first step in getting a good auto loan refinance rate is shopping around and comparing offers. Banks, credit unions, and online lenders may offer different terms and conditions for auto refinancing.
Shopping Around
If you have an auto loan and you’ve built your credit score since you got it, you may qualify for a better interest rate under refinancing. Weighing the pros and cons of refinancing a car and shopping around can help you determine whether refinancing is right for you.
Changing Your Terms
Changing your terms with an auto refi loan can be appealing if it gives you new conditions that are right for you. A shorter term may come with higher monthly payments, but you’ll pay less in interest overall. A longer term will most likely have lower monthly payments, but you’ll pay more in interest over the life of the loan.
Auto Loan Refinancing Rates
Refinancing your auto loan may be right for you if you can secure a lower interest rate. A car loan can help you buy a new or used car, and you may have the option of immediately refinancing with another lender if you’re unhappy with your car loan terms.
If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.
FAQ
What is considered a good interest rate on a car loan?
A good interest rate on a car loan is one that’s better than the average auto loan rate. The average auto loan interest rate is 6.73% for new vehicle financing and 11.87% for used vehicle financing as of the first quarter of 2025, data show. You may have a good interest rate on a new car loan if your APR is below 6.73%.
Are interest rates on auto loans going up?
Interest rates on auto loans can fluctuate based on economic conditions and central bank policies. Currently, there is a trend of rising interest rates, which can make car loans more expensive. It’s wise to shop around and compare rates to find the best deal.
What is the average auto loan rate?
The average auto loan interest rate is 6.73% for new vehicle financing and 11.87% for used vehicle financing, according to Experian’s State of the Automotive Finance Market report for the first quarter of 2025.
Photo credit: iStock/Jinda Noipho
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