What is a good interest rate for a car loan?

A good car loan rate depends on your credit score. Excellent credit (750+) should expect 5-7% on new cars and 6-8% on used. Good credit (700-749) typically sees rates around 7-9% for new and 8-10% for used cars.

How much does credit score affect car loan rate?

Credit score significantly affects your rate. Someone with excellent credit (750+) might pay 6% while someone with poor credit (550) could pay 18%+. On a $30,000 loan, that's a difference of over $10,000 in interest.

Average Car Loan Interest Rates by Credit Score (2026)

Understand how your credit score impacts your auto loan rate and total cost.

Average Auto Loan Rates by Credit Score

As of March 2026

New Car Loan Rates

Credit Score	Credit Tier	Average Rate
781-850	Super Prime	5.64%
661-780	Prime	7.01%
601-660	Nonprime	10.53%
501-600	Subprime	14.08%
300-500	Deep Subprime	18.25%+

Used Car Loan Rates

Credit Score	Credit Tier	Average Rate
781-850	Super Prime	6.40%
661-780	Prime	8.75%
601-660	Nonprime	13.25%
501-600	Subprime	17.50%
300-500	Deep Subprime	20.50%+

How Credit Score Affects Your Payment

$30,000 car loan, 60-month term:

Credit Score	Rate	Monthly Payment	Total Interest
800 (Excellent)	5.64%	$573	$4,380
750 (Very Good)	6.50%	$586	$5,160
700 (Good)	7.50%	$600	$5,983
650 (Fair)	10.50%	$643	$8,605
600 (Poor)	14.00%	$698	$11,880
550 (Bad)	18.00%	$762	$15,689

Cost of Lower Credit

Compared to 800 Score	Extra Monthly	Extra Over Loan
700 score	+$27	+$1,603
650 score	+$70	+$4,225
600 score	+$125	+$7,500
550 score	+$189	+$11,309

Rate Differences by Loan Term

Excellent Credit (750+)

Term	New Car Rate	Used Car Rate
36 months	5.25%	5.75%
48 months	5.50%	6.25%
60 months	6.00%	6.75%
72 months	6.50%	7.25%
84 months	7.00%	N/A

Fair Credit (650)

Term	New Car Rate	Used Car Rate
36 months	9.75%	11.50%
48 months	10.25%	12.25%
60 months	10.75%	13.25%
72 months	11.50%	14.50%

Longer terms often have higher rates AND you pay more interest

Credit Tier Definitions

Tier	Score Range	Characteristics
Super Prime	781+	Best rates, any lender
Prime	661-780	Competitive rates
Nonprime	601-660	Higher rates, more lenders available
Subprime	501-600	Limited options, high rates
Deep Subprime	300-500	Very limited, specialist lenders

Rate by Lender Type

For borrower with 700 credit score:

Lender Type	New Car	Used Car
Credit union	6.25%	7.00%
Bank	6.75%	7.75%
Online lender	6.50%	7.50%
Captive (manufacturer)	7.00%*	9.00%
Buy-here-pay-here	18%+	20%+

*May have lower promotional rates for new cars

Impact of Down Payment

$30,000 car, 650 credit score:

Down Payment	Amount Financed	Rate	Monthly	Interest
0%	$30,000	11.00%	$652	$9,124
10%	$27,000	10.75%	$582	$7,929
20%	$24,000	10.50%	$513	$6,789

Larger down payment may help secure better rate

How to Improve Your Rate

Short-Term Strategies

Strategy	Potential Impact
Pay down credit cards	Lower utilization = higher score
Dispute errors on credit report	Remove inaccurate items
Become authorized user	On someone’s good account
Get preapproved at credit union	Often best rates
Make larger down payment	Lower loan-to-value

Longer-Term Improvements

Strategy	Timeline	Potential Score Increase
Pay all bills on time	3-6 months	20-50 points
Pay down credit cards	1-3 months	20-40 points
Don’t open new accounts	6-12 months	10-30 points
Keep old accounts open	Ongoing	Maintains history

Score Impact on Loan Approval

Credit Score	Approval Odds	Lender Options
750+	Excellent	Any lender
700-749	Very Good	Most lenders
650-699	Good	Many lenders
600-649	Fair	Some lenders
550-599	Difficult	Limited lenders
Below 550	Very Difficult	Subprime only

Refinancing Based on Credit Improvement

If your credit improves, refinancing can save money:

Example: Credit Improved from 620 to 720

	Original Loan	Refinanced
Balance	$22,000	$22,000
Rate	12.00%	7.50%
Term remaining	48 months	48 months
Payment	$579	$530
Monthly savings		$49
Total savings		$2,348

When to Refinance

Credit score improved 50+ points
Rates have dropped
At least 12-24 months into loan
Loan balance high enough to matter

Co-Signer Impact

Scenario	Rate
Your credit (620) alone	12.00%
With co-signer (780)	6.50%
Rate reduction	5.50%

$25,000 loan, 60 months:

	Without Co-signer	With Co-signer
Monthly	$556	$489
Total interest	$8,379	$4,345
Savings		$4,034

Quick Reference: What’s a “Good” Rate?

Your Credit	Target Rate (New)	Target Rate (Used)
Excellent (750+)	Under 7%	Under 8%
Good (700-749)	Under 8%	Under 9%
Fair (650-699)	Under 11%	Under 13%
Poor (600-649)	Under 14%	Under 16%

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