What Are Current Car Loan Interest Rates?

What Are Current Car Loan Interest Rates?


12 Min Read

If you’re in the market for a new car but don’t have enough money, one of the first things you’re probably wondering is: what are current car loan interest charges?

That’s the right question. After all, the total interest rate on your loan significantly impacts your monthly payments—and even more importantly, it affects how much money you end up paying in total for new or used cars. So knowing how much car loan interest rates are can guide your decision about which financing option is best for you.

But how do you find out what current auto loan interest rates are? And how do they compare to other types of financing? We’ll answer those questions below, but first, let’s find the context.

High Car Loan Payments are Affecting All Car-Buying Segments

It’s no secret that the average American household is in debt up to their eyeballs—and their cars are a big part of that burden. According to Michelle W. Bowman at the Federal Reserve, 71% of Americans have outstanding credit card debt. Of those people, 43% pay less than $600 per month on their credit cards, and another 35% pay between $600 and $1,000. But another group of consumers is struggling to make ends meet: those who buy new cars.

Why? Because automobile loan interest rates experience hefty hikes. And when auto loan interest rates go up as they have recently (from 3%-4% to 4%-5%), this can significantly impact your monthly payment amount. Thus, many borrowers end up paying more than they’ve expected.

Drivers Are Being Met with Faster than Usual Vehicle Depreciation

We know that the last thing you want to hear about is your car depreciating, but it’s a reality of 2024. Depreciation is when a vehicle loses value over time. It happens because the car becomes less desirable as newer models come out and more people buy them. The older model comes with higher diagnostic and repair expenses and therefore is worth less money.

The average car loses about 9% of its value every year, but in 2024, drivers are being met with faster-than-usual vehicle depreciation. But what does that mean? It means that if you bought a car for $20,000 and drove it for five years, then sold it at the end of those five years, it would only be worth about $11,000—a difference of about $9,000.

Are You Waiting to Buy a Car?

We recommend getting a loan to make the purchase right now. Here’s why:

  • The market is down. It means that if you wait, you could pay more for your car than if you got it now.
  • There are great incentives for new cars right now. You can get a great deal on your vehicle if you get a loan.
  • Once interest rates go up, you’ll have to pay more on interest. So if you’re thinking about waiting until auto loan interest rates go up to buy a car, think again—you’ll pay more for your loan than you would now.

What are Car Loans, and How Do They Work?

Car loans are secured loans that you can use in the car-buying process. They work straightforwardly and are usually structured, so you pay back your lender (the bank, local credit union, dealership, or another car buying service) over time in the regular monthly payment.

When you apply for an auto loan, you’ll need to provide information about yourself and your income, such as:

  • Your income and employment status (this will help determine the amount you can get);
  • Your credit history (this will help determine if the lender will approve your application);
  • The amount of money that you want to borrow from the lender;
  • Your Social Security Number;
  • Your bank account, phone number, and email address.
current car loan interest rates

Types of Auto Loans

There are so many loans for purchasing an auto, and every dealership, bank, or car-buying service seems to have its way of doing things. But we’re here to help! We’ve put together a list of the different types of auto loans so that you can better understand which one is right for you.

New Car Loan

A new auto loan is a financing option that allows you to buy a new vehicle. You’ll get up to 100% of your car’s value and repay the loan in monthly payments within the determined term. It usually comes with low-interest rates and flexible terms to make your debt affordable.

Used Car Loan

A used auto loan is a type of financing you can use to buy a used car. The loan will be paid back over time, typically with monthly payments. Usually, a used car loan interest rate is higher than that of a new one.

Auto Refinance

Auto refinances for your vehicle are a way to make sure you’re getting the best possible deal. It allows you to get a new loan at a lower interest rate and use it to repay your existing one. Thus, you’ll pay less interest over time, which can add to significant savings.

Cash-out Auto Refinance

Cash-out auto refinance allows you to get a new larger loan than your previous one and use it to cover your current debt. The remaining money can be used for anything you want—like paying off other loans, buying something, or just having some extra cash.

Private Party Car Loan

A private party car loan is a loan you can get for purchasing a vehicle from a private seller, not a dealership or car lot. A private party auto loan is usually easier to qualify for, but it may also come with higher costs.

Lease Buyout

A lease buyout means you pay off the rest of your lease early and then get to keep the car. It can be a great way to save money on payments and get more use out of the vehicle.

What to Know Before Applying for an Auto Loan?

Auto loans are a great way to get the car of your dreams, but before applying for one, you should know a few things.

How much can I afford?

The first step in getting a loan is determining how much money you can realistically afford to spend on a car. It will help ensure that you won’t take out a too-large loan and spend only what is necessary. If you don’t want to calculate this, you can use an online auto loan calculator like DinkyTown – Car Loan Calculator.

What kind of vehicle do I need?

If you already know what type of vehicle you want, it will be much easier for the lender to help you find a loan that meets your needs. If not, consider what car suits your lifestyle and budget before applying for an auto loan.

What kind of credit score do I have?

Your credit score is essential in determining whether or not your application will be approved and at what loan rate. Additionally, it can affect the amount of a down payment (if needed). Before applying for an auto loan, check your credit score so there are no surprises down the road.

what are current car loan interest rates

What are Car Loan Interest Rates Right Now by Credit Score?

Auto loan interest rates are based on your credit score, but what is your score, and what does the credit score mean for your car payment?

If you have a higher credit score, you’ll get a low-interest rate. If you have a bad credit score, you’ll pay more interest. Here are the current average auto loan rates at which the best loan providers are lending to customers with different credit scores:

  • Excellent Credit Score: 3.99% – 5.99%
  • Good Credit Score: 4.99% – 7.49%
  • Fair Credit Score: 6.49% – 8.49%
  • Poor Credit Score: 8.49% – 10.49%
  • Bad Credit Score: 10.49% – 12.49%

How to Choose the Best Auto Loan Lender?

Many factors go into choosing the best lender for your needs. Here are some things to consider when selecting an auto lender.

Interest Rates

The best auto loan rates will vary depending on your credit score and the auto loan type you’re receiving. You must shop around so that you can find a low or at least a suitable annual percentage rate.


Most banks and credit unions charge fees for processing paperwork and other administrative costs associated with loans. So it’s essential to consider these when determining which lender best suits your needs.

Customer Service

When choosing a lender, ensure they have excellent customer service. This way, if anything goes wrong with your loan, there will be someone available to help resolve issues quickly and efficiently.

How to Get an Auto Loan?

You can find auto loans easily and buy a new car without damaging your budget. Here’s how to get one.

Shop around

Before you go car shopping, search for multiple lenders (banks, credit unions or private lenders) that can provide affordable auto loan offers that will fit your needs.


Getting pre-qualified is a quick process that involves answering questions about your income and credit history. Once you’re prequalified, you’ll know how much you can expect to spend each month on your new vehicle. Additionally, it will help you compare offers from various lenders and choose the option with the most favorable terms.

Fill out the loan application form

Your lender will ask for some basic information about yourself and your vehicle purchase when they send over an application form for you to fill out. You can expect this form to include your name and contact information (phone numbers, email address), model of car(s) you want (the more specific, the better), amount of down payment required (if any, depending on your credit report and debt-to-income ratio), monthly income statements showing how much money comes into your household each month.

Sign a loan agreement

When you get credit approval, read the terms of your loan contract carefully to ensure they meet your expectations. Then, sign the loan agreement to initiate the process of transferring money to a car seller.

Make monthly payments

Start making your monthly car payments according to the set loan term. You can pay them offline in a loan office or set up automatic payments via your bank account to avoid forgetting the repayment dates.

How the 2024 Fed Hikes Impact the Cost to Finance a Car

The Federal Reserve has announced that it plans to raise car loan rates in 2024, which is not so great for those looking to buy cars. The Fed’s decision to raise interest rates means consumers will pay more money on their car loans. When auto loan rates rise, auto lenders can charge higher fees for their services. However, as automobile loans usually come with fixed rates, this rise can only impact new borrowers.

Let’s take a look at an example. Suppose that you want to buy a car that costs $20,000. You’re going to take out an automobile loan for 60 months with a 10% down payment, which is $2,000. As an average auto loan interest rate is now about 4%, your total interest paid after 60 months of repayment will be $1,889.84. Your monthly loan payment will be $331.50.

But after a rise in car loan interest rates, the situation will be a bit different. A projected interest hike is about 0.75%. Thus, the average interest rate will be about 4.75%. The same car on the same loan conditions will come with the total interest paid of $2,257.46 and the monthly payment amount of $337.62.

Frequently Asked Questions

What are good auto loan interest rates right now?

A good interest rate on auto loan funding right now is around 4%. Still, we recommend shopping around and comparing rates from multiple lenders to get the best deal possible before committing to one particular lender or loan type.

Is a 3.5% or 5% interest rate good for a car?

A 3.5% auto loan interest rate on your car is pretty standard—it’s what most lenders offer as their average interest rate for auto financing. However, you can often get better rates if you shop around and look for a lender who will give you the best auto loan rates.

Who has the best rates for car loans?

It’s hard to tell, as the interest rates specified on a lender’s website may differ from its actual offers. This is because everything depends on a borrower’s credit score, state of residence, and even the market conditions. You may check out offers from Auto Pay or Open Road Lending, but keep in mind that you may get a higher interest rate than the one they advertise. So how do you know which one will be right for you? The answer is: always prequalify and then compare average auto loan rates.

What credit score do you need to get 0% auto financing?

The answer is that it depends on the lender and what kind of car you want (new or used car). For example, some lenders will offer 0% financing if your credit score is in the high 600s, while others will require credit scores of 700 or higher.

Can I sell my car with a loan?

The short answer is yes, and it’s a great idea! If you have a loan on your car, you can sell it and walk away with cash in hand. To do this, you’ll need to determine if there’s enough equity in your vehicle to cover the auto loan rates and any fees associated with selling it.

Can I get an auto loan with a bad credit score?

Yes! You can get a loan with a poor credit score from most lenders that don’t have a minimum credit score requirement. But you’ll want to ensure you have a reliable source of income to get the best new or used car loan interest rates. If you don’t have a job, a good or fair credit score or your income is unreliable, it will be tough for you to get an auto loan, but not impossible.

Get the best loan options to buy a car of your dreams!Apply

Edward Evans

Written by Edward Evans

Written by Edward Evans

Edward Evans is a money management expert and a freelance author of personal finance columns. He aims to provide accessible financial advice to improve financial literacy for average Americans and inspire them to take control of their personal finances and build wealth.

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