Quick Reference

Current Auto Loan Rates (2025-2026)

Average auto loan APRs by credit score, lender type, and loan term for new and used vehicles

Last Updated: Feb 2026

Key Numbers

New Car Avg

6.56% APR

Used Car Avg

11.40% APR

Credit Unions

~1.7% Lower

Avg Term

69 Months

Auto loan rates remain elevated in early 2026 following years of Federal Reserve rate increases. Your actual rate depends heavily on credit score, loan term, and lender type. The table below shows current national averages.

Vehicle Type	Avg. APR	Avg. Loan	Avg. Payment	Avg. Term
New Car	6.56%	$42,332	$748	69 mo
Used Car	11.40%	$27,128	$532	67 mo

Source: Experian State of the Automotive Finance Market, Q3 2025.

New for 2025–2028: The One Big Beautiful Bill Act allows a deduction of up to $10,000/year in auto loan interest on new, U.S.-assembled vehicles — even if you take the standard deduction. See the Interest Deduction section below for full rules.

Rates by Credit Score

Credit score is the single biggest factor in your auto loan rate. The tables below show average APRs by credit tier and the resulting monthly payment on a sample loan. All scores use VantageScore 4.0.

New Car Rates

Credit Tier	Score Range	Avg. APR	Monthly on $30K / 60 mo
Super Prime	781 – 850	5.18%	$567
Prime	661 – 780	6.85%	$591
Near Prime	601 – 660	9.50%	$631
Subprime	501 – 600	12.90%	$683
Deep Subprime	300 – 500	15.84%	$729

Used Car Rates

Credit Tier	Score Range	Avg. APR	Monthly on $20K / 60 mo
Super Prime	781 – 850	7.80%	$402
Prime	661 – 780	9.70%	$422
Near Prime	601 – 660	14.20%	$472
Subprime	501 – 600	18.50%	$521
Deep Subprime	300 – 500	21.90%	$562

Source: Experian State of the Automotive Finance Market, 2025. Scores based on VantageScore 4.0.

The cost of poor credit: On a $30,000 new car loan over 60 months, a deep subprime borrower pays roughly $9,700 more in total interest than a super prime borrower.

Rates by Lender Type

Where you get your loan matters almost as much as your credit score. Credit unions consistently offer rates 1–2 percentage points below banks, which can save thousands over the life of the loan.

Average Rates by Lender (60-Month New Car)

Lender Type	Avg. APR (New)	Avg. APR (Used)	Interest on $30K / 60 mo
Credit Union	5.75%	6.34%	$4,568
Bank	7.49%	7.80%	$6,031
Online Lender	6.50 – 8.00%	8.00 – 10.00%	$5,200 – $6,600
Captive/Mfr. (Promo)	0 – 3.9%	N/A	$0 – $3,100
Dealer (Standard)	8.00 – 10.00%	10.00 – 14.00%	$6,600 – $8,500

Source: NCUA Q2 2025, Experian Q3 2025. Captive lenders include Toyota Financial, Ford Credit, Honda Financial, etc.

Lender Trade-Offs

Lender Type	Advantages	Drawbacks
Credit Union	Lowest rates (1–2% below banks), flexible approval, often waive fees	Must meet membership requirements, smaller branch networks
Bank	Convenient for existing customers, relationship discounts (0.25–0.50%)	Higher rates than credit unions, stricter criteria
Captive/Mfr.	0% or low-APR promos, one-stop convenience, loyalty programs	Promos require 720+ credit, shorter terms, may forfeit cash rebates
Online Lender	Fast digital process, easy rate comparison, competitive for prime	No in-person support, rates vary widely by platform

Rate-shopping tip: Get pre-approved from 3–5 lenders within a 14-day window. Credit bureaus treat multiple auto loan inquiries within this period as a single hard pull.

Loan Terms & Total Cost

Longer terms lower monthly payments but increase total interest cost. The average new car loan is 69 months, with 72-month terms the most popular at 36% of all loans. Many financial planners suggest keeping terms to 60 months or less.

Term Popularity & Cost ($40,000 at 6.5% APR)

Term	% of Loans	Monthly	Total Interest	Total Cost
36 months	4.4%	$1,226	$4,136	$44,136
48 months	5.6%	$948	$5,504	$45,504
60 months	~25%	$781	$6,860	$46,860
72 months	36.1%	$672	$8,384	$48,384
84 months	~20%	$593	$9,812	$49,812

Popularity data: Experian Q3 2025. Cost calculations assume $40,000 financed at 6.5% APR, no down payment.

The 20/4/10 Guideline

A common affordability guideline used by many financial planners:

Target	Rule	Why It Matters
20%	Minimum down payment	Avoids negative equity from day one
4 yr	Maximum loan term (48 months)	Minimizes total interest paid
10%	Max share of take-home pay	Keeps overall budget balanced

Long-term risk (72+ months): You may owe more than the car is worth for years (negative equity), rates are higher for longer terms, and major repairs typically begin around year 7–8 while you still have payments. Only 5.6% of borrowers currently use 48-month terms — if the 20/4/10 guideline doesn't fit your budget, consider a less expensive vehicle rather than stretching to a longer term.

Auto Loan Interest Deduction (2025–2028)

The One Big Beautiful Bill Act (signed July 4, 2025) created a new above-the-line deduction for auto loan interest. Borrowers can deduct up to $10,000/year in interest on qualifying new, U.S.-assembled vehicles — whether they itemize or take the standard deduction.

Rule	Detail
Tax Years	2025 through 2028 (loans originated after Dec. 31, 2024)
Max Deduction	$10,000 per taxpayer per year
Eligible Vehicles	New only, final assembly in U.S., GVWR < 14,000 lbs, personal use
Phase-Out (Single)	Begins at $100,000 MAGI, fully phased out at $150,000
Phase-Out (MFJ)	Begins at $200,000 MAGI, fully phased out at $250,000
Phaseout Formula	Deduction reduced by $200 for each $1,000 of MAGI over threshold
Refinances	Interest on refinanced qualifying loans is generally eligible
Not Eligible	Used vehicles, leases, business-use vehicles, loans from relatives
How to Claim	Report on Schedule 1-A; include the vehicle's VIN on your return

2025 transition year: Lenders are not yet required to issue a standardized form. For tax year 2025, they may provide interest totals via online portals, letters, or other reasonable means. A formal reporting form (similar to Form 1098) is expected for 2026 onward.

Sources

This content is for educational and informational purposes only and does not constitute financial, tax, or legal advice. Consult a qualified professional for guidance tailored to your situation.