Average Car Loan Interest Rates in 2025

Taking out an an auto loan is a major decision that will impact your finances for years to come. For example, the average monthly payment on a new car loan is $742, with buyers locked in for repayment terms of about 68 months, according to the Q4 2024 State of the Automotive Finance Market by Experian Automotive.

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To get the best deal possible, it helps to understand the ins and outs of interest rates, including what constitutes a competitive rate. Here’s a guide to the average car loan interest rates in 2025.

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Key takeaways

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• As of the fourth quarter (Q4) of 2024, the average interest rate is 6.35% for new car loans and 11.62% for used car loans (Experian Automotive).
• Interest rates have risen in recent years due to economic factors and Federal Reserve policy changes. For instance, the average new car loan rate increased from 4.31% in 2020 to 6.35% as of Q4 2024.
• Most auto loans have fixed interest rates, meaning your rate remains the same throughout the loan term unless you refinance.
• To avoid paying more interest, you could try boosting your credit score, shopping around for multiple loan offers, making a larger down payment or choosing a shorter loan term.

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What’s a good car loan rate?

The average interest rate for a car loan is currently 6.35% if you’re buying new and 11.62% if you’re buying used, according to Experian Automotive. The rate a lender offers you, however, will depend on the amount of risk you present.

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To assess your risk level, lenders often consider a range of factors, including:

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• Credit score
• Credit history
• Repayment term length
• Loan amount
• Down payment amount
• Vehicle specs 
• Debt-to-income (DTI) ratio

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Ultimately, the less likely you are to default (in the lender’s eyes), the lower your rates will be. For example, the average rates of highest-risk borrowers are about three times higher than those of low-risk borrowers. 

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Average car loan interest rates by credit score

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Here’s a closer look at how the average APRs for car loans vary by credit score.

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Do auto loan rates change?

Lenders regularly adjust their car loan rates in response to changing economic conditions and fluctuations in the Federal Reserve's benchmark rate. For example, the Fed’s rate hikes throughout 2022 and 2023 drove up interest rates on all loan and banking products, including auto loans. The average interest rate for a new car loan was just 4.61% in 2022 — 2.23% lower than it is now. 

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Changes to an auto lender’s rates don't mean your interest rate will change if you have an existing auto loan. In most cases, auto loans come with fixed rates that stay the same throughout the loan term and you’ll need to refinance to get a lower rate.

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Here’s a closer look at how present-day auto loan interest rates compare to those of the early 2020s.

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Auto loan rates in 2024

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Auto loan interest rates remained high in 2024, continuing the trend that began in late 2022. According to Experian Automotive data for the fourth quarter (Q4) of 2024, the average APR was 6.35% for new cars and 11.62% for used cars. That’s a noticeable jump compared to pre-2022 averages and signals how much borrowing costs have climbed in just a few years.

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Much of this increase is tied to efforts by the Federal Reserve to combat inflation by raising benchmark interest rates. For example, the Fed’s rate hikes throughout 2022 and 2023 drove up interest rates on all loan and banking products, including auto loans. The average interest rate for a new car loan was just 3.86% in Q4 2021 — more than 2% lower than it is now. 

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Past auto loan rates

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These numbers show how interest rates for car loans rose sharply in 2022 and 2023 — especially for used cars. Rising inflation, interest rate hikes and tighter lending standards drove up rates.

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How to get a better auto loan rate

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If you’re not happy with the auto loan rate a lender quotes you, here are a few ways to get a better one:

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• Boost your credit score: Look for ways to quickly improve your credit score such as removing mistakes from your credit reports, adding bills through Experian’s Boost program and paying down revolving credit lines. 
• Shop around: Rates vary between lenders so shop around, apply for preapprovals and compare at least three to five quotes. 
• Make a larger down payment: Paying more up front can decrease the amount you need to borrow and the risk you present to the lender. 
• Choose a shorter term: The average interest rates for car loans increase as repayment term lengths increase, so a shorter repayment term could lower your rate. ‍
• Apply with a cosigner: Apply with a well-qualified cosigner who agrees to pay the loan off if you can’t. Their guarantee can reduce the risk you present and land you a lower rate.

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Can I refinance later for a better rate?

Many lenders offer auto loan refinancing so you can replace your existing loan with a more favorable one. However, your ability to land a better rate in the future will depend on market conditions and personal factors.

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Here are a few examples of situations where you could likely get a better rate:

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• Your credit improves: Lower credit scores correlate with lower interest rates, so you might benefit from a refinance if your score has improved since you took out your loan. 
• Market rates drop: If market rates drop after you get your loan, a refinance can help you take advantage of the lower rates. 
• You pay down your loan balance: By keeping up with your regular payments, the loan amount you need to refinance becomes smaller. Smaller loans present less risk to lenders, which can mean lower rates.  
• You request a shorter term: Shorter repayment terms come with lower interest rates so choosing a term shorter than your original loan could help. ‍
• You didn’t comparison shop when you got the first loan: If you didn’t shop around before getting your original auto loan, you may have missed out on a more competitive deal. Comparison shopping during a refinance can help determine whether a lower rate is available, even if market conditions haven’t changed much. 

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If you go ahead with a refinance, you’ll want to run the numbers on the new loans you’re considering. Get quotes to determine whether any lenders can beat your current loan in terms of the interest rate, monthly payment amount and overall cost.

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FAQs

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Learn more about auto loan rates by reviewing the following frequently asked questions.

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Is 7% interest on a car loan good?

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A 7% interest rate is average for a new car loan and below average if you’re buying used. As the market currently stands, interest rates below 7% are only likely if you’re financing a new car and have a credit score above 660. 

What is a good APR for a 72-month car loan?

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A good APR on a 72-month loan is currently a rate that’s at or below 6.61% if you’re buying new and 12.36% if you’re buying used, according to Experian Automotive. However, what’s considered “good” will change over time as the market conditions shift. 

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What interest rate can I get with a 750 credit score for a car?

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The average interest rate for someone with a 750 credit score is about 6.5% for a new car or 10% for a used car. That said, your rate will be influenced by factors beyond your credit score, such as your down payment amount, term length and DTI ratio. 

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Is a 72-month car loan bad?

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A 72-month car loan has pros and cons when compared to loans with shorter terms. On the upside, it can give you more time to pay off your vehicle and lower monthly payments. On the downside, it will often come with a higher interest rate which contributes to a higher total cost.

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Have auto loan interest rates improved in 2025 vs. 2024?

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As of the first half of 2025, auto loan interest rates haven’t improved much compared to 2024. Rates remain elevated due to lingering inflation and cautious lending policies. While there are signs the market may stabilize, most borrowers are still seeing rates similar to late 2024 — especially for used cars.

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