What Is a Good Auto Loan Rate? (2025 Detailed Guide With Accurate Market Data)
Most car buyers ask the same question:
“What is a good auto loan rate?” In 2025, a good auto loan rate is generally:
4%–7% for new cars
7%–11% for used cars
…but the exact rate depends heavily on your credit score, loan term, vehicle age, and market conditions.
This complete guide uses official rate data from Experian, NerdWallet, Guardian Credit Union, Mercedes-Benz, and national auto finance sources — giving you the most accurate answer available online.
What Counts as a Good Auto Loan Rate in 2025
Get an instant look at what lenders consider a good auto loan rate in 2025. These ranges are based on national auto finance data and represent the current market standards for most borrowers. Use these numbers to quickly compare your lender’s offer and see whether you’re getting a good, average, or high rate.
Card 1 — Good New Car Loan Rate (2025)
- 4% – 7% APR
Most borrowers with average to good credit qualify for this range.
Card 2 — Good Used Car Loan Rate (2025)
- 7% – 11% APR
Used cars carry slightly higher risk, so APRs start higher.
Card 3 — Best Rates Available (Excellent Credit)
- 3% – 5% APR
Top-tier rates offered to borrowers with 720+ credit scores.
What Exactly Is A “Good” Auto Loan Rate?
A good auto loan rate is the rate that is:
Lower than the national average for your credit score
Lower than dealership financing offers
Lower than used-car averages if buying new, and vice versa
Similar to rates offered by credit unions, which usually offer the best deals
A good rate always depends on your credit tier, because lenders adjust their risk.
Full Rate Table (New Vs Used Car Loan Rates)
Average Auto Loan Rate By Credit Score (2025)
| Credit Score Tier | New Car Average Rate | Used Car Average Rate | What Is Considered a “Good” Rate? |
|---|---|---|---|
| 781–850 (Excellent) | 3.17% – 4.88% | 3.8% – 7.43% | 3%–5% new, 4%–7% used |
| 661–780 (Prime) | 4.03% – 6.51% | 5.48% – 9.65% | 5%–7% new, 7%–10% used |
| 601–660 (Near Prime) | 6.79% – 9.77% | 10.1% – 14.11% | 7%–10% new, 10%–14% used |
| 501–600 (Subprime) | 10.98% – 13.34% | 16.27% – 19.00% | 10%–14% new, 14%–19% used |
| 300–500 (Deep Subprime) | 13.76% – 15.85% | 19.32% – 21.60% | 14%–18% new, 19%–22% used |
Good Auto Loan Rates By Credit Score
Excellent Credit (720–850) — Best Possible Rates
- If your score is 720+, you qualify for the lowest rates on the market.
Good Rate Range:
- New car: 3% – 5%
- Used car: 4% – 7%
Why:
- Lender risk is low
- Preapproval almost guaranteed
- You qualify for promotional rates (2.99%–3.99% from banks/credit unions)
Good Credit (660–719)
- This is considered “Prime” credit.
Good Rate Range:
- New car: 5% – 7%
- Used car: 7% – 10%
Most mainstream lenders target this group with competitive offers.
Fair Credit (620–659)
- This range sees higher risk for lenders.
Good Rate Range:
- New car: 7% – 10%
- Used car: 10% – 14%
Dealership financing will usually be higher — compare lenders.
Bad Credit (580–619)
- Subprime lending category.
Good Rate Range:
- New car: 10% – 14%
- Used car: 14% – 19%
A “good” rate here simply means anything below 15%–20%.
Poor Credit (300–579)
- Deep subprime.
Good Rate Range:
- New car: 14% – 18%
- Used car: 19% – 22%
Lenders see this as highest risk, so “good” means “lower than average for your tier.”
Good Auto Loan Rate For New Vs Used Cards
Good Rate for a New Car
- A good interest rate for a new car is 4%–7% for most borrowers.
Why new car rates are lower:
- More predictable condition
- Lower lender risk
- Often subsidized by auto manufacturers
- Better resale value
Good Rate for a Used Car
- A good interest rate for a used car is 7%–11%.
Why used car rates are higher:
- More mechanical risk
- Vehicle value depreciates faster
- Older cars → higher lender risk
- Dealers mark up used-car loan APRs more frequently
Factors That Determine A Good Auto Loan Rate
Excellent Credit (720–850) — Best Possible Rates
- Credit Score — Most Important Factor
PDF data clearly shows:
➡️ Higher score = Lower APR
➡️ Score drop of 60 points can double your rate
Loan Term (Shorter = Lower Rate)
- 36 months → lowest APR
- 48 months → very good
- 60 months → standard but slightly higher
- 72 months → much higher APR
New vs Used Vehicle Type
- New = Lower risk = Lower rates
- Used = Higher risk = Higher APR
Lender Type
- Credit Unions = Lowest average rates
- Banks = Moderate rates
- Dealerships = Highest markup (1%–3% extra APR)
Down Payment Amount
- A larger down payment reduces lender risk, lowering your interest rate.
Debt-to-Income Ratio
Lower DTI (below 36%) = lower APR.
Higher DTI = lenders increase rates.
How To Know If Your Auto Loan Rate Is “Good”
Check all 3 credit bureau reports
Dispute incorrect records
Pay down credit card balances
Choose shorter loan terms
Shop with credit unions first
Get pre-approved before visiting dealer
Use a co-signer if needed
- Each step can reduce APR by 1%–4%.
Good Auto Loan Rates By Credit Score
Excellent Credit (720–850) — Best Possible Rates
- If your score is 720+, you qualify for the lowest rates on the market.
Good Rate Range:
- New car: 3% – 5%
- Used car: 4% – 7%
Why:
- Lender risk is low
- Preapproval almost guaranteed
- You qualify for promotional rates (2.99%–3.99% from banks/credit unions)
Good Credit (660–719)
- This is considered “Prime” credit.
Good Rate Range:
- New car: 5% – 7%
- Used car: 7% – 10%
Most mainstream lenders target this group with competitive offers.
Fair Credit (620–659)
- This range sees higher risk for lenders.
Good Rate Range:
- New car: 7% – 10%
- Used car: 10% – 14%
Dealership financing will usually be higher — compare lenders.
Bad Credit (580–619)
- Subprime lending category.
Good Rate Range:
- New car: 10% – 14%
- Used car: 14% – 19%
A “good” rate here simply means anything below 15%–20%.
Poor Credit (300–579)
- Deep subprime.
Good Rate Range:
- New car: 14% – 18%
- Used car: 19% – 22%
Lenders see this as highest risk, so “good” means “lower than average for your tier.”
How To Know If Your Auto Loan Rate Is “Good”
Your auto loan rate is Good if:
✔ It’s below the average rate for your credit tier
✔ It’s lower than dealership financing
✔ You were preapproved by multiple lenders
✔ The term is 60 months or less
✔ You made a decent down payment
✔ Your APR is below NerdWallet/Experian averages
✔ It aligns with the table above
FAQs
What is a good auto loan rate right now?
4%–7% for new cars, 7%–11% for used cars.
Is 4% a good auto loan rate?
- Yes — 4% is excellent for any credit tier.
Is 10% a good auto loan rate?
- For excellent or good credit → No
- For bad credit → Yes (average is 14%–19%)
What is a good auto loan rate for excellent credit?
- 3%–5% new, 4%–7% used.
What is a good auto loan interest rate for a used car?
- 7%–11% for most buyers.
What is a good APR rate for an auto loan?
- APR includes lender fees; a good APR is generally:
- Below 6% for excellent credit
- Below 8% for good credit
- Below 12% for fair credit
Does loan term affect what is considered a good rate?
- Yes.
Shorter terms = lower good rate target.