Auto loans
Auto Loan Rates: What You Should Be Paying
Auto loan rates depend on four things: your credit tier, the loan term, whether the car is new or used, and who is funding the loan. The gap between a credit union preapproval and a subprime dealer contract on the identical vehicle can exceed fifteen percentage points, which is why shopping the finance separately from the car is the single highest-value step in the process.
Data snapshot
- Year over year
- -0.16 pts
- 12-month range
- 7.37% – 7.63%
Average rate on a 60-month new-car loan at commercial banks, from the Federal Reserve's G.19 release. Captive finance arms and credit unions price around this level, sometimes far below it during manufacturer promotions.
Why used-car loans cost more
Used vehicles carry higher rates because the collateral is less predictable: valuation is noisier, mechanical risk is higher, and recovery values in a default are lower. Expect a meaningful premium over the new-car rate for the same borrower and term.
Vehicle age caps also apply. Many lenders will not finance a car beyond a certain model year or mileage, and those that will charge a premium and shorten the maximum term.
Term length and total interest
Every extra year of term lowers the payment and raises both the rate and the total interest. Longer loans also extend the period during which the balance exceeds the car's value, so an accident or a forced sale leaves a shortfall.
A useful discipline: choose the car by the total price you can finance over 48 to 60 months, not by the monthly payment a dealer can construct over 84.
Where to get the best rate
Rate sources differ systematically, and the right sequence protects you from the worst of them.
- Credit unions: consistently the lowest average rates, especially for members with average credit.
- Banks: competitive for existing customers with deposit relationships.
- Captive lenders (the manufacturer's finance arm): unbeatable during subsidised 0% or 1.9% promotions, but usually only on selected models and short terms.
- Dealer-arranged third-party finance: convenient, and the dealer may add a markup to the rate the lender approved.
- Online lenders: fast preapprovals that give you a firm number to negotiate against.
0% finance versus a cash rebate
Manufacturers frequently offer a choice between subsidised 0% financing and a cash rebate. They are alternatives, not extras: taking the rebate means paying a market rate on a smaller balance.
Run both. Calculate the total of payments under 0% on the full price, and the total under your preapproved rate on the price minus the rebate. On short terms and large rebates, the rebate usually wins; on long terms and small rebates, 0% does.
What people search for
Monthly US search volume for the questions this page answers, from our keyword research set.
| Search query | Monthly searches | Difficulty |
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| car payments calculator | 450,000 | 96 |
| loan calculator car loan | 368,000 | 85 |
| car loan calculator car | 301,000 | 93 |
| estimate car payment calculator | 201,000 | 92 |
| refinancing car loan | 201,000 | 88 |
| auto loan and | 165,000 | 78 |
| cars car loan calculator | 165,000 | 88 |
| auto car payment calculator | 90,500 | 93 |
| vehicle car loan calculator | 90,500 | 86 |
| vehicle auto loan calculator | 90,500 | 92 |
Frequently asked questions
Start here
Car Loan Refinancing: When It Is Worth It
Lower the rate without restarting the clock.
Read the guideCar Loans With Bad Credit: How to Borrow Safely
Get the car without the trap — and refinance out early.
Read the guideCar Payment Calculator: Work Out What You Can Afford
Size the loan, then test it against total running costs.
Read the guide