Top Auto Loan Rates for New and Used Cars (Spring 2025)

If you’re thinking about financing a vehicle this spring, it’s important to understand how auto loan rates are trending — and what that means for your wallet. In Spring 2025, the average 60-month loan for a new car sits at 7.42% APR, while used car rates are notably higher, averaging between 11% and 12%. These are national averages, but what you actually pay can vary widely based on your credit score, the lender you choose, and the loan terms you agree to.

For borrowers with strong credit, much better rates are still available. Some lenders — especially credit unions — are offering auto loans starting in the low 4% range. A few automakers even advertise 0% promotional financing on select models. But to get those offers, you need to know where to look, what to prepare, and how to compare.

Average Auto Loan Rates in Spring 2025

Here’s a quick overview of current rates:

New car loans (60-month average): 7.42% APR
Used car loans (national average): 11–12% APR
New car loans for riskier borrowers (volume-weighted average): 9.38% APR
Used car loans for higher-risk borrowers: 14.22% APR

These figures are based on data from Cox Automotive and recent industry-wide reports. What they show is that many buyers — especially those with fair or poor credit — are being charged well above the averages quoted by dealerships or online lenders.

That’s why it’s critical to know where you fall in the credit spectrum and get multiple offers before committing.

Factors That Affect Auto Loan Rates

Auto loan rates aren’t one-size-fits-all. What you’re offered depends on several factors, each of which plays a direct role in how lenders assess your risk and price your loan.

Credit Score

This is the single most important factor. The higher your score, the lower your rate. Most lenders use Auto FICO scores, which are slightly different from your standard FICO.

A score over 720 typically qualifies for top-tier rates. A score below 660 will likely push your rate into double digits. Even a 20-point improvement can drop your rate by a full percentage point.

Loan Term

A longer loan term means lower monthly payments, but it almost always comes with a higher APR. For example, rates on a 36-month loan might start at 4.09%, but that same loan stretched to 72 months could carry a rate above 6.5% at the same lender.

Plus, longer terms increase the risk of becoming “upside down” — when your car is worth less than what you still owe.

Vehicle Age

New vehicles usually come with better rates. Used vehicles, especially those over 5 years old or 125,000 miles, are considered riskier by lenders. Expect higher rates on these cars.

Some lenders even place restrictions on how old or how high-mileage a used car can be to qualify for financing.

Down Payment

Putting more money down reduces the loan amount and lowers the lender’s risk. That can help you secure a better rate and may even help with approval if your credit is borderline.

Lender Type

Not all lenders charge the same. Credit unions typically offer lower rates than traditional banks or dealerships. Online lenders vary, but many advertise competitive starting rates — especially if you have excellent credit.

Best Auto Loan Rates for New Cars

While the national average is over 7%, several lenders are currently offering significantly better rates for new vehicles — particularly to borrowers with strong credit and short loan terms.

Here are some of the standout options:

0% APR offers from manufacturers: Brands like Honda, Subaru, and Volkswagen are offering 0% financing on models like the Prologue, Solterra, and ID.4. These are limited-time offers for well-qualified buyers and typically only available for 36 to 48 months. You must finance through the manufacturer’s own lender (called a captive lender), and often you must give up any cash rebate or incentive.
Navy Federal Credit Union: Offers 4.09% APR for loans up to 36 months. Terms up to 60 months are available but come with slightly higher rates (around 4.49%). Membership is limited to military members, veterans, and their families.
PenFed Credit Union: Offers 4.59% APR and additional rate discounts (0.25–0.50 points) when using their car-buying service powered by TrueCar. Membership is open to the general public.
Bank of America: Offers 5.59% APR for terms between 48–72 months, with an additional 0.25–0.50 point discount for Preferred Rewards clients.
Capital One Auto Finance: Offers 5.89% APR with pre-qualification available via soft credit check. Financing must be used at a partner dealership.
LightStream (Truist): Offers 6.49% APR with AutoPay, though this is an unsecured loan, meaning the vehicle isn’t used as collateral. Best for borrowers with excellent credit.

Always remember: these are starting rates for top-tier credit. If your credit score is lower or you’re looking at longer terms, the rate could be higher.

Best Auto Loan Rates for Used Cars

Used car loans are generally more expensive, but credit unions and some banks still offer relatively affordable options.

Navy Federal Credit Union: One of the few offering under 5% APR on used cars, with 4.99% APR for up to 36 months.
Bank of America: Offers 5.79% APR for used vehicles under 10 years old with fewer than 125,000 miles. Preferred Rewards members can get a discount.
Capital One Auto Finance: Matches its new-car rate of 5.89%, but again, only available through partner dealerships.
LightStream: Offers a similar rate as for new cars (~6.49%), and you can finance private-party sales as well — something not all lenders allow.

PenFed doesn’t publish a used-car baseline, but based on past data, its used car rates are typically 0.50 to 0.75 percentage points higher than its new-car offers.

If you’re financing a used car, the vehicle’s age and condition will matter. Some lenders won’t finance cars older than 10 years or with mileage over 125,000.

Credit Score Requirements for Competitive Rates

To qualify for the best rates, your credit must be in solid shape. Here’s a breakdown:

720 and above: Eligible for the best rates (as low as 0–4.5% depending on lender and term).
660–719: Considered prime. Offers may start around 5.5–7%.
620–659: Subprime range. Expect APRs in the 8–12% range.
Below 620: Deep subprime. You may only qualify for rates over 13–14%, or you may be declined altogether without a co-signer or large down payment.

Before applying, check your credit reports for errors and know your Auto FICO score — not just your VantageScore from free apps. The difference can be several dozen points.

Loan Terms and Their Impact on Monthly Payments

Loan term affects more than just your monthly payment — it also impacts the total cost of your loan and the interest rate.

36 months: Higher monthly payments, lowest interest rates.
48–60 months: Moderate payments and rates. A common sweet spot.
72–84 months: Low payments, but much higher interest and total cost. These terms also increase your chances of negative equity.

A longer loan may seem more affordable month to month, but you’ll likely pay much more in interest over time. For example, a $30,000 loan at 5.5% APR over 60 months costs about $4,400 in interest. That same loan over 84 months at 7% APR would cost over $8,000 in interest.

Dealer Financing vs. Bank and Credit Union Loans

Dealerships may offer convenience, but that doesn’t always mean the best rate. Many dealers add a markup to the loan offer from a bank, which increases your APR without you realizing it.

Captive financing — like Toyota Financial or Ford Credit — can offer real value through 0% or low-interest promotions. However, these often require top-tier credit and shorter terms (36–48 months).

Banks and credit unions generally offer more transparent terms and no dealer markups. You also have more control and can walk into the dealership preapproved.

If a dealer offers 0%, run the numbers. Sometimes, taking a cash rebate or price discount and using credit union financing results in lower overall costs.

How Preapproval Helps You Lock in a Good Rate

Getting preapproved before you shop for a car gives you leverage. It sets your budget, shows dealers you’re serious, and lets you compare financing options on equal ground.

A preapproval is a firm offer based on your credit, income, and loan term. Most are good for 30–60 days and give you time to shop around.

You can still negotiate at the dealership. In fact, showing that you already have a lower rate often prompts dealers to offer better terms to keep your business.

Tips to Qualify for a Better Auto Loan Rate

Even small changes can lead to better financing options. Here’s how to improve your chances:

Check your credit reports and correct any errors.
Pay down existing debt before applying.
Save for a larger down payment.
Choose a shorter term if possible.
Set up automatic payments — many lenders offer discounts (0.25–0.50%).
Apply with lenders that offer prequalification (soft pull) first, to avoid unnecessary hard inquiries.

Mistakes to Avoid When Comparing Auto Loans

Some common mistakes can cost you in the long run. Avoid the following:

Focusing only on the monthly payment instead of the total cost.
Accepting the dealer’s first offer without comparing others.
Ignoring fees, prepayment penalties, or loan conditions.
Choosing an overly long term just to lower payments.
Not reading the fine print on 0% APR deals — especially what incentives you may be giving up.

How Rate Trends Might Shift in Summer 2025

Looking ahead to late summer, analysts expect some rate movement. Here’s what’s influencing it:

Federal Reserve Policy: The Fed left rates unchanged in March and May. A single 0.25% cut is expected in Q3, which may lower APRs slightly.
Bond Market Trends: Yields on auto loan-backed securities remain high, which keeps lender funding costs up. This limits how far APRs can fall.
Credit Quality Changes: Delinquencies are rising, so lenders are tightening approval standards. Strong credit will matter even more.

Sub-6% rates will likely remain limited to credit unions and borrowers with high scores through summer.

Final Thoughts on Securing the Right Auto Loan

Even in a high-rate environment, you can still find a good deal — but it takes planning. The most competitive auto loans go to buyers who understand their credit, compare multiple offers, and know how to use preapprovals to their advantage.

Keep your loan term as short as your budget allows. Avoid financing with subprime lenders if possible, and use credit unions when you can. Always run the numbers — both monthly and total — before signing any agreement.

In 2025, preparation makes all the difference. The more you know before you apply, the more money you’ll save when it’s time to drive away.

Additional Resources for Borrowers

If you’re preparing to finance a car, it’s worth taking time to explore trusted tools and information sources that can help you make smarter decisions and avoid costly mistakes. Below are reliable, U.S.-based resources that provide free access to credit tools, loan calculators, and consumer protections:

AnnualCreditReport.com. You’re entitled to one free credit report per year from each of the three major credit bureaus: Equifax, Experian, and TransUnion. Reviewing your credit report before applying for a loan helps you catch errors and understand where you stand.
Consumer Financial Protection Bureau (CFPB) – Auto Loans Guide. This official government resource explains how auto financing works, what your rights are, and how to shop for the best deal. It also includes warning signs to avoid predatory lenders.
FICO® Score Estimator. MyFICO offers a free tool that estimates your FICO score range based on answers to a few questions. While not a replacement for your actual score, it can help you gauge your credit tier before applying for a loan.
National Credit Union Administration (NCUA) – Find a Credit Union. Credit unions often offer lower rates than banks. Use this tool to locate federally insured credit unions you may be eligible to join — even if you’re not part of the military or a specific profession.

FTC Auto Buying and Financing Tips. The Federal Trade Commission offers plain-language guidance on buying and financing vehicles. It includes tips for negotiating, understanding loan terms, and spotting hidden fees.