Your credit score has a major impact on the cost of your car loan. Understanding the relationship between your credit score and your car loan interest rate will help you get the best deal, and looking at the average auto loan rates by credit score will help you know what to expect.
☝️ Remember that the rates cited are averages. You may get different offers from different lenders. Make sure you shop around for the best auto loan rates instead of going with your first offer or the option that has the best advertising. It’s always best to pre-qualify for a loan before you visit a dealer!
Average Auto Loan Rates by Credit Score
Here are the most recent average auto loan rates for each credit score bracket.
Average rates for Q4 (October – December) 2023
| Category | Score Range | New car average interest rate | Used car average interest rate |
|---|---|---|---|
| Deep subprime | 300-500 | 14.78% | 21.55% |
| Subprime | 501-600 | 12.28% | 18.89% |
| Near prime | 601-660 | 9.60% | 14.12% |
| Prime | 661-780 | 7.01% | 9.73% |
| Super prime | 781-850 | 5.64% | 7.66% |
Actual interest rates are based on many factors such as state, down payment, income, and others.
Source: Experian: State of the Automotive Finance Market Q4 2023
Calculator
Use our auto loan calculator below to see just how much your credit score can affect your monthly payment and the total amount of interest you end up paying for your loan.
How Your Credit Score Impacts Auto Loan Rates
Your credit score has a huge impact on the interest rate you’re offered and on the cost of your loan. In the table below, you can see the average interest rates for both new and used cars by credit score to see just how much of an effect it has.
Average auto loan rates by credit score (Q4 2023)
| Category | Score Range | New car average interest rate | Used car average interest rate |
|---|---|---|---|
| Deep subprime | 300-500 | 14.78% | 21.55% |
| Subprime | 501-600 | 12.28% | 18.89% |
| Near prime | 601-660 | 9.60% | 14.12% |
| Prime | 661-780 | 7.01% | 9.73% |
| Super prime | 781-850 | 5.64% | 7.66% |
Actual interest rates are based on many factors such as state, down payment, income, and others. Source: Experian: State of the Automotive Finance Market Q4 2023
👉 Finding financing options when you have bad credit can be difficult. But luckily, there are lenders and loan marketplaces that will work with you. Discover the best auto loans for bad credit.
How Your Credit Score Affects the Monthly Payment
Here’s an example to illustrate the difference your credit score makes in determining your monthly payment.
👉 Example:
Let’s assume you’re taking out a new car loan with the following terms:
Car cost: $30,000
Down payment: $3,000
Loan term: 48 months
| Credit Score | Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|---|
| 300-500 | 14.78% | $748.42 | $8,924 |
| 501-600 | 12.28% | $714.43 | $7,307 |
| 601-660 | 9.60% | $679.61 | $5,621 |
| 661-780 | 7.01% | $646.67 | $4,040 |
| 781-850 | 5.64% | $629.65 | $3,223 |
As you can see, your credit score plays a major role in determining the interest rate you’re offered and the cost of your loan.
Average Rates for a New Car
Most dealerships will advertise plenty of incentives for buying a new vehicle, such as cash rebates, low interest rates, or special lease offers. Buying a new car generally comes with much better interest rates than buying a used vehicle.
Here’s what you can realistically expect to get based on national averages.
| Category | Score Range | Average interest rate | Average loan amount | Average term (months) | Average monthly payment |
|---|---|---|---|---|---|
| Deep subprime | 300-500 | 14.78% | $35,718 | 71.78 | $740 |
| Subprime | 501-600 | 12.28% | $40,366 | 73.54 | $774 |
| Near prime | 601-660 | 9.60% | $43,605 | 74.00 | $782 |
| Prime | 661-780 | 7.01% | $42,244 | 69.94 | $747 |
| Super prime | 781-850 | 5.64% | $36,630 | 61.90 | $703 |
Average Rates for a Used Car
We see incredible offers online and on TV for new car loan rates, but we rarely see used auto rates advertised. Borrowers will usually pay a higher interest rate for a used car loan.
Rates are higher for used cars because their value is lower. If the lender has to repossess your car, it may be difficult for them to sell it for enough to cover your balance. That means more risk to the lender. Lenders charge higher rates when their risk rises.
Here’s the rate you can expect to get based on national averages.
| Category | Score Range | Average interest rate | Average loan amount | Average term (months) | Average monthly payment |
|---|---|---|---|---|---|
| Deep subprime | 300-500 | 21.55% | $20,153 | 63.07 | $533 |
| Subprime | 501-600 | 18.89% | $22,987 | 66.25 | $548 |
| Near prime | 601-660 | 14.12% | $26,362 | 68.43 | $547 |
| Prime | 661-780 | 9.73% | $28,074 | 68.40 | $526 |
| Super prime | 781-850 | 7.66% | $27,331 | 64.77 | $515 |
You can see the impact of the higher rates. The difference, of course, is that the average sale price of a new car in the US is $48,808, while the average price of a used car is $27,000. That’s a big difference!
Even with higher interest rates, used cars can be a good deal simply because the sticker price is often much lower than the price of a used car.
⚠️ Be Careful!
Buying a used car has its risks. That’s why you always want to check the vehicle’s history. You can run a vehicle history report on sites like Carfax using the Vehicle Identification Number (VIN). If the dealer or seller will not give you the VIN, consider this a major red flag and move on to another vehicle.
Average Auto Refinance Rates
Refinance rates are usually the same as rates for a loan taken at the time of sale, so the figures quoted above will apply.
👉 Refinancing can help you get a better deal on your car loan, but to get the best deal, you’ll need to get the best refinancing loan! We’ve put together a list of the best auto refinance companies.
FAQs
The average interest rate for auto loans on new cars is 9.60%. The average interest rate on loans for used cars is 14.12%.
Most traditional auto lenders look for borrowers whose credit score is in the prime range or above (661 to 850 credit score). If your score is in this range, you will have no problem finding a lender, and you’re likely to have multiple offers with good terms.
The average interest rate on a new car loan with a credit score of 750 is 7.01%, while the average interest rate on a used car loan is 9.73%.
The average interest rate on a new car loan with a credit score of 650 is 9.60%, while the average interest rate on a used car loan is 14.12%.
An interest rate below 6.44% for a new and 9.06% for a used car can be considered good for a 72-month car loan.
In general, your credit score does not affect how much car financing you can get. If your credit score is below 600, your choice of lenders and the amount they would be willing to finance might be limited.
Yes, you can still buy a car with bad credit, but finding financing options can be difficult. Your choices of lenders will be limited, and the interest rates you will be offered will be significantly higher than if you had good credit.
In general, your credit score needs to be at least 600 to qualify for a traditional auto loan, but the minimum credit score varies by lender. If your credit score is below 600, you might have to look for a bad credit lender who would be willing to finance your car loan.
An 84-month car loan is generally not hard to get if you have good credit, but you should think hard about whether the low monthly payment is worth the high cost of a loan with this long a term.
Figuring out how much you can afford to spend on a car is pretty straightforward. The best way is to work backward from your income, savings, and budget. Here’s how to do that for the initial and recurring costs of having a car:
1. Choose your downpayment
2. Estimate your upfront costs
3. Determine your interest rate
4. Determine your repayment term
5. Estimate recurring costs
