Your credit score has more effect on the cost of a car loan than almost anything else you control. The same car financed over the same term can cost thousands of dollars more for a borrower with fair credit than for one with excellent credit. Knowing the typical rates for your credit tier, and getting your own quotes before you visit a dealer, is the easiest way to avoid overpaying.
This guide shows the latest average auto loan rates by credit score from Experian, explains what else affects your rate and walks through how to shop for financing. It is general information, not financial advice. Your actual rate depends on the lender, your full credit profile, the car and the loan terms.
Average auto loan rates by credit score
Experian’s data for the second quarter of 2026, which uses VantageScore 4.0 credit tiers, shows the gap between tiers clearly. Used car loans carry higher rates than new car loans in every tier.
| Credit tier (score) | Average new car APR | Average used car APR |
|---|---|---|
| Super prime (781 to 850) | 4.41% | 6.29% |
| Prime (661 to 780) | 6.15% | 8.81% |
| Near prime (601 to 660) | 9.71% | 13.93% |
| Subprime (501 to 600) | 13.52% | 19.10% |
| Deep subprime (300 to 500) | 16.11% | 21.62% |
These are averages, so many borrowers receive rates above or below them. Manufacturer promotions, such as low or 0% financing on certain new models, can come in far below these numbers for buyers with strong credit, though they often require giving up a cash rebate.
What the difference costs in real money
Car prices make these gaps significant. Kelley Blue Book reported an average new-vehicle transaction price of $50,089 in August 2026, so many buyers are financing tens of thousands of dollars.
Example: Two buyers each finance $35,000 for a new car over 60 months. At 4.41%, the super prime buyer pays roughly $650 a month and about $4,000 in total interest. At 13.52%, the subprime buyer pays roughly $805 a month and about $13,300 in total interest. Same car, same term, but more than $9,000 extra in interest for the lower credit tier. Even moving up one tier can save thousands.
What else affects your rate
Credit score is the biggest factor, but lenders also weigh the loan term, since longer loans usually carry higher rates; the size of your down payment; whether the car is new or used, and how old a used car is; your debt-to-income ratio; and the type of lender. Credit unions often offer lower rates than banks or dealer-arranged financing, and captive lenders tied to car manufacturers sometimes run special promotions on new vehicles.
Longer terms, such as 72 or 84 months, lower the monthly payment but increase total interest and raise the risk of owing more than the car is worth, which is called being upside down or having negative equity. That becomes a problem if you need to sell or trade the car early or if it is totaled.
Step-by-step: getting the best auto loan
- Check your credit first. Review your credit reports for errors and know your score before you shop.
- Set a budget. Decide on a total price and monthly payment you can afford, including insurance, fuel and maintenance.
- Get preapproved. Apply with a credit union, bank or online lender before visiting a dealer, so you know your rate.
- Shop within a short window. Credit scoring models usually treat multiple auto loan inquiries within a short period, often 14 to 45 days, as one.
- Let the dealer compete. Ask whether the dealer can beat your preapproved rate, and compare the full terms in writing.
- Negotiate price separately. Agree on the car’s price before discussing financing or trade-ins, so the numbers are not blended together.
Watch the dealer finance office
Dealers can arrange financing through many lenders, and they are sometimes allowed to mark up the rate the lender offers, keeping part of the difference. That is one reason a preapproval helps: it gives you a benchmark. The finance office will also offer add-ons such as extended warranties, gap insurance, paint protection and service plans. Some can be useful, but they are optional, often negotiable and can usually be bought elsewhere. Adding them to the loan means paying interest on them too.
Focus on the total cost of the loan, not just the monthly payment. A salesperson can lower your payment by stretching the term, which can make a worse deal look affordable.
If your credit is fair or poor
You can still get a car loan, but costs will be higher, so it is worth taking a few steps first. A larger down payment reduces the amount you borrow and can improve your rate. A less expensive car keeps the loan smaller. A co-signer with strong credit can help, though they become responsible for the debt. Paying down credit card balances and making every payment on time for a few months before applying can lift your score. Be very cautious with “buy here, pay here” lots, which may charge very high rates and use aggressive repossession practices.
How much to put down
A down payment lowers the amount you borrow, reduces total interest and helps protect you from negative equity, since new cars lose value quickly in the first few years. A common guideline is to put down around 20% on a new car and 10% on a used car, though any amount helps. If you are trading in a vehicle, check its value with several sources before you go to the dealer, and keep the trade-in negotiation separate from the purchase price so you can see what you are really getting for it.
Refinancing an existing loan
If your credit has improved since you bought your car, or rates have fallen, refinancing may lower your rate or payment. Compare the new rate, any fees and the remaining term. Extending the term to cut your payment can increase total interest even at a lower rate, so check the total cost before you switch.
Common questions
What is a good auto loan rate in 2026
It depends on your credit. In Q2 2026, Experian data showed average new car rates of about 4.4% for super prime borrowers and about 6.2% for prime borrowers. Rates well above your tier’s average are worth questioning.
Is it better to finance through the dealer or a bank
Get a preapproval from a bank or credit union first, then let the dealer try to beat it. Dealers sometimes have manufacturer promotions that are hard to match, but a preapproval protects you from markups.
How long should a car loan be
Shorter terms cost less in total interest. Many buyers aim for 60 months or less, choosing the shortest term with a payment that fits their budget.
Does shopping for a car loan hurt my credit
Multiple auto loan inquiries within a short shopping window are usually counted as one for scoring purposes, so the effect is small.
Before you finance
Check your credit, get preapproved, negotiate the price before talking financing and compare the total cost of every offer in writing. Keep the term as short as your budget allows and question any add-on you did not ask for.
Editorial note: This article is general information and not financial advice. It is not affiliated with any lender or dealer. Average rates come from Experian data for Q2 2026, and the transaction price comes from Kelley Blue Book’s August 2026 report. Payment examples are estimates. Review each lender’s current terms before borrowing.