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.