Rate Trends

New Auto Loan Rates

What is an Auto Loan?

Though fairly self-explanatory, an Auto Loan is a loan taken out to buy a specific vehicle, either new or used, from a dealer or third-party seller.

How to Read the Average Rate Chart

Every day, Credit Karma stores and tracks Auto Loan rates from hundreds of lenders nationwide. Our data is broken out into 3 year, 4 year, and 5 year loans for new vehicles at a loan amount of $25,000.

As with most loans, the best time to finance is when rates are at their lowest. A vehicle, however, is not always a purchase you have the ability to put off until rates reach a point at which you're comfortable. If you need a car now, finding a lender that can get as close to your desired rate as possible is more important than the prevailing average rate.

If you can afford to wait, this chart lets you see where rates have been so you can get a sense of where they might be going.

Auto Loan Features

Most lenders offer terms from two to seven years (24 to 84 months).
The maximum amount of money you are permitted to borrow and your interest rate depend on two main factors, the lender and credit score.
With most lenders, interest rates increase as the length of the loan increases and as the age of the vehicle increases (once it is no longer classified as "new").
Unlike Mortgage and Home Equity Loan rates, Auto Loans are often still funded with other deposit funds the lender has on hand, such as CDs and other time/savings deposits. So while there is a relationship between Auto Loans and the Federal Funds Rate (because it affects those deposit rates), it is not a direct relationship.

Auto Loan Benefits

A new car in the driveway! Nothing gives you the freedom to go wherever you want, whenever you want, like a vehicle of your own. Coupes, sedans, trucks, vans, SUVs, convertibles... they all have their place, whether for work, play, or a combination of the two.

Auto Loan Considerations

Vehicles have a tendency to be something on which people overspend. Be careful not to overextend yourself financially because you want the bigger engine or the better sound system. Also, with gas prices as high as they are it's important to factor in those costs when thinking about any given vehicle.

Longer repayments terms (five or more years) may mean lower payments but they also mean a higher interest rate and you end up paying more overall than you would with shorter repayment terms. In the same vein, most cars depreciate rather quickly and the longer you take to pay off your loan the wider the gap between what the car is worth and what you still owe.

Where to go for an Auto Loan

Your bank or credit union may be a good place to start, but like any loan or line of credit it's important to compare several options.

Comments

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This chart/article is meaningless without posting the corresponding credit scores.

kingcake64 8 months ago

Totally agree, kingcake64. I have a bad credit score and my auto loans average 19-24%. :-(

It is VERY difficult, if not impossible, to get out of this rut. I don't stress over it. The rich will get richer and the poor will pay for being poor for all of their lives.

blmbmj 6 months ago

After you pay 3-6 months of your auto loan on time, and in the mean time try to reduce the overall credit balance, you should be able to increase your credit score significantly. Then, you ought to try refinancing your auto loan. It's very possible that you'll get around 11%. That'll save you A LOT. I only earn a poorly $1,500/month, but I have a credit score of 762, and I can get an auto loan at around 5%. You can do it too.

ygtai 5 months ago

Excellent point. If your score increases considerably, you can generally save hundreds a month by refinancing your auto loan.

CK Moderator

u should stress over it...

dhart2020 5 months ago

During the first 3-6 months, you are decreasing your outstanding principal very slowly. Your balance is not likely decreasing as much as you think.

Try finding a credit union when you refinance...their rates are usually way lower.

duanej987 2 months ago

hey, Why I am seeing rates in the range of 11% to 21% for autoloans? What abt the manufacturer's apr offers, they normall are <4% right!! why haven't any of you guys use that?

gates2010 1 month ago

Where are you seeing 11-21%? Perhaps you are seeing poor credit loans?.

CK Moderator

I had a autoloan for 2 years and I dont think I was late once. I was told that if I payed the loan on time I would be eligable for a lower intrest rate. It was 21%. When I traded the car in they would only go down 1% what gives?

sweetpea4424 3 months ago

If you have a poor to fair credit score are you more likely to get a better rate/financed at all if you purchase a new car?

anybody know?

11danijo11 3 months ago

I purchased a vehicle with a 19% rate and after one year of on time payments, paying more than the agreed upon amount I was denied a refinancing due to the balance being too low. Do not wait too long.

IpushWeight 2 months ago

This article and others on CK are helping me to decide how to purchase an automobile using all of the options that are available. I have discovered that if you can obtain a loan from either a Credit Union or your bank, the interet rates are much better. However, I was not able to find out that when you purchase from a dealership - if they have any type of relationship with the actual financing done through them. Does anyone know?? Thanks!

drmkachr 1 month ago

Some dealerships won't accept out side financing. In those cases, just make sure there is not clause prohibiting refinance. Then simply refinance the loan with the Credit Union in 30-60 days.

CK Moderator