Key takeaways
- The average auto loan rate was 6.35% for new cars and 11.19% for used cars in the second quarter of 2026, according to Experian.
- Your credit score is the biggest factor: borrowers with scores of 781+ averaged 4.41% on new cars, while those with scores of 501–600 averaged 13.52%.
- Getting preapproved by a bank or credit union before you visit the dealer gives you a rate to beat.
- New for 2025–2028: you may be able to deduct up to $10,000 a year of interest on a loan for a new, U.S.-assembled vehicle.
The best way to get a low auto loan rate is to check your credit, get preapproved by two or three lenders, and choose the shortest loan term you can comfortably afford. Doing this before you walk into a dealership lets you negotiate the car price and the financing separately, so you don’t overpay on either one.
Car loans are expensive right now. The average new-car payment was $765 a month in the second quarter of 2026, according to Experian. This guide shows current average rates by credit score, how bank, credit union and dealer financing compare, and how to cut what you pay in interest.
Average auto loan rates by credit score (Q2 2026)
| Credit tier (score) | New car APR | Used car APR |
|---|---|---|
| Super prime (781–850) | 4.41% | 6.29% |
| Prime (661–780) | 6.15% | 8.81% |
| Near prime (601–660) | 9.71% | 13.93% |
| Subprime (501–600) | 13.52% | 19.10% |
| Deep subprime (300–500) | 16.11% | 21.62% |
| All borrowers | 6.35% | 11.19% |
Source: Experian, State of the Automotive Finance Market, Q2 2026. The average new-car loan was $43,610 and the average used-car loan was $27,852.
How much your credit score costs you
Here’s what a $30,000 new-car loan over 60 months costs at each tier’s average rate:
| Credit tier | APR | Monthly payment | Total interest |
|---|---|---|---|
| Super prime | 4.41% | $558.06 | $3,483.82 |
| Prime | 6.15% | $582.08 | $4,924.73 |
| Near prime | 9.71% | $633.14 | $7,988.34 |
| Subprime | 13.52% | $690.60 | $11,436.27 |
| Deep subprime | 16.11% | $731.30 | $13,877.78 |
Moving from subprime to prime would save about $6,500 in interest on the same car. If your score is low, even a few months of on-time payments and lower card balances can help. See our guide to improving your credit score.
Where to get an auto loan
| Lender type | Pros | Cons |
|---|---|---|
| Credit unions | Often the lowest rates; flexible with members | You must qualify for membership |
| Banks | Relationship discounts; easy if you already bank there | Stricter credit and vehicle rules |
| Online lenders | Fast preapproval; easy to compare | Rates vary widely by credit |
| Dealer financing | Convenient; automaker promos (sometimes 0%) on new cars | Dealers can mark up the rate; promos may replace cash rebates |
Credit unions are worth checking first. Learn how they differ from banks in our credit unions vs. banks guide.
Bank of America auto loans
Bank of America offers loans for new and used cars bought from dealers, with terms of 48, 60 or 72 months through its online application. Loans start at $7,500 ($8,000 in Minnesota). BofA Rewards members can get a rate discount of 0.10% to 0.50%, depending on their tier; the discount doesn’t apply to leases or applications made at a dealership. The bank doesn’t finance cars bought from independent dealers, and vehicle age and mileage can affect eligibility. Check the bank’s website for today’s rates, which change daily.
Navy Federal Credit Union auto loans
Navy Federal serves military members, veterans, Department of Defense employees and their families. As of Nov. 2, 2026, its new-car rates started at 4.19% APR for 12- to 36-month terms and 4.59% for 37 to 60 months; used-car rates started at 5.09% for up to 36 months. These “as low as” rates assume excellent credit, and the maximum APR is 18%. Terms of up to 96 months are available on new vehicles with fewer than 7,500 miles. Preapprovals are good for 90 days.
Tip: Rate shopping within a short window, typically 14 to 45 days depending on the scoring model, generally counts as a single inquiry for your credit score. Get all your quotes close together.
Loan term: shorter saves you money
Longer loans lower the monthly payment but cost more interest, and you’re more likely to owe more than the car is worth. Here’s a $35,000 loan at 6.35% APR:
| Term | Monthly payment | Total interest |
|---|---|---|
| 60 months (5 years) | $682.36 | $5,941.53 |
| 72 months (6 years) | $585.85 | $7,181.28 |
| 84 months (7 years) | $517.19 | $8,444.16 |
This assumes the same rate for every term. In practice, lenders usually charge more for longer loans, so the gap is often bigger. Try your own numbers with our auto loan calculator or compare offers side by side with the loan comparison calculator.
New: the car loan interest tax deduction
For tax years 2025 through 2028, you may deduct up to $10,000 a year of interest on a loan for a qualifying vehicle, even if you take the standard deduction. To qualify:
- The vehicle must be new (you’re the original owner), with final assembly in the United States, and weigh under 14,000 pounds.
- The loan must have been taken out after 2024, be secured by the vehicle, and be mainly for personal use. Leases and used cars don’t qualify.
- The deduction phases out for modified adjusted gross income above $100,000 (single) or $200,000 (married filing jointly), shrinking by $200 for each $1,000 over the limit.
Example: On a $35,000, 60-month loan at 6.35%, you’d pay about $2,046 in interest in the first year. In the 22% tax bracket, deducting it would cut your federal tax by about $450. You’ll need the vehicle’s VIN when you file. Learn more in our tax planning guide.
How to get the best auto loan rate: 7 steps
- Check your credit reports and scores and fix any errors before you apply.
- Set a budget. Keep your total car costs, including insurance and fuel, at a level you can manage alongside your other bills. Our debt-to-income calculator shows how lenders will see you.
- Get preapproved by two or three lenders, including a credit union.
- Negotiate the car’s price first, then discuss financing.
- Ask the dealer to beat your preapproval. If they can’t, use your own loan.
- Put more money down. At least 10% to 20% down lowers your rate and helps you avoid owing more than the car is worth.
- Skip add-ons you don’t need, such as extended warranties or paint protection rolled into the loan.
Refinancing your car loan
If your credit has improved or rates have dropped since you bought your car, refinancing can lower your payment. It usually makes the most sense in the first few years of the loan, when more of each payment goes toward interest. Bank of America doesn’t refinance auto loans, but many credit unions and online lenders do. Watch for fees and avoid stretching the term so long that you pay more overall.
Frequently asked questions
What is a good auto loan rate right now?
Borrowers with excellent credit averaged 4.41% for new cars and 6.29% for used cars in the second quarter of 2026. Anything near or below those rates is a strong offer.
What credit score do I need for a car loan?
There’s no single minimum, and some lenders work with scores below 600, but scores of 661 or higher usually get much better rates.
Is it better to finance through the dealer or a bank?
Get a bank or credit union preapproval first. Then let the dealer try to beat it. Automaker promotional rates on new cars can be the cheapest option, but compare them with any cash rebate you’d give up.
How long should a car loan be?
Choose the shortest term you can afford. A 60-month loan or shorter keeps interest costs down and reduces the risk of owing more than the car is worth.
Can I pay off my car loan early?
Most auto loans don’t have prepayment penalties, but check your contract. Paying extra toward principal shortens the loan and saves interest.
Related: best personal loans, how to prioritize debt repayment, all free financial calculators.
Sources: Experian State of the Automotive Finance Market, Q2 2026; Navy Federal Credit Union auto rates (Nov. 2, 2026); Bank of America auto loan terms (Nov. 2, 2026); IRS rules for the qualified passenger vehicle loan interest deduction (One Big Beautiful Bill Act). Payments calculated by FinInfoBlog. Rates change often; confirm with each lender. This article is for educational purposes and isn’t financial or tax advice.
Written by Chanchala
Founder & Lead Writer · B.Sc. Mathematics (Honors) · 9 years in banking & lending
Chanchala is the founder and lead writer of FinInfoBlog. She holds a B.Sc. in Mathematics (Honors) and has 9 years of experience in banking and lending. She writes plain-English guides on savings, CDs, loans, credit and personal finance for U.S. readers, and makes sure every example shows the math behind the money decision. How we research and fact-check.