If you’re in the market for a new—or new-to-you—ride, you’re probably wondering what to expect in terms of annual percentage rates on car financing. While interest rates vary by lender, getting a general idea of average rates based on credit score can help you understand what to expect before you apply for a loan.

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What is the average interest rate on a used car?

According to Experian’s State of the Automotive Finance Market report for the second quarter of 2022, the average first-quarter interest rate on a used car loan was 8.62%. But we know very few borrowers are just “average.” The table below lets you know what rates you can expect as of September 2022 based on your unique credit profile.

Credit score category	Average loan APR for used car
Super Prime (781–850)	3.71%
Prime (661–780)	5.58%
Non-prime (601–660)	10.48%
Subprime (501–600)	17.29%
Deep Subprime (300–500)	20.99%

If you have an excellent credit score

Credit score	Interest rate
750 or higher	4.65%

It should come as no surprise that borrowers with the best credit scores get lower rates on auto financing, while those with lower credit scores usually see higher rates. If your credit score is 750 or higher, you’re considered to have excellent credit, so you can expect the lowest rates and lower monthly payments. To earn this score, you’ve had to keep a running record of on-time credit card and loan payments and solid borrowing practices, so auto lenders know they can count on you to continue that trend with repayment on your car purchase.

If you have a good credit score

Credit score	Interest rate
700–749	5.58%

Borrowers are considered to have good credit if their scores range from 700 to 749. Though you may have a few dings in your credit history, you’re still considered pretty low risk, so you can expect fairly competitive rates when applying for auto loans—but you likely won’t qualify for special financing or incentives from dealerships.

If you have a fair or bad credit score

Credit score	Interest rate
669 and under	15.74%

If you have a credit score of less than 700, you will likely see much higher rates, so it will likely be much more expensive for you to finance a used car than those with higher credit scores. Many lenders also won’t lend to a borrower with poor credit, so if your score falls at or below 600, you’ll likely find it difficult to secure loan offers.

Of course, lenders consider several other factors in addition to your credit report when calculating your interest rate, including:

Loan amount

Loan term

Down payment or trade-in value

MORE: How to get a cosigner for a bad credit car loan

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What is a good interest rate for a used car loan?

There’s no single answer when it comes to determining what is a good interest rate for a used car loan. A good rate for you may be considered great by another borrower and too high by yet another.

A better question to ask would be, “what is a fair interest rate for me for a used car loan?” This question takes into account the most important factor involved in calculating an auto loan interest rate—your credit score. A fair interest rate will allow your lender to compensate for any added risk they may take on by lending to you and result in a monthly payment you can afford and that aligns with your credit score.

MORE: What is a good interest rate on a car?

Interest rates for used cars vs. new cars

Buying a new vehicle may mean spending more money upfront on the sales price, but used vehicle interest rates are always higher than new, no matter how good your credit score is. On average, financing a used vehicle costs about four percentage points more than financing a new one. But, why though?

As with everything in lending, financing used or new car loans is all about risk, and used vehicles represent a higher risk than new ones. Their value is usually lower overall, and, thanks to continued depreciation, it’s more likely they’ll be totaled in an accident—resulting in significant financial losses for the lender. Lenders pass on this increased risk to you, the borrower, in the form of higher interest rates.

MORE:

How to get a private-party car loan

What lenders offer the best car loan interest rates?

Whether you’re buying new or used, you have a ton of options when it comes to securing an auto loan—especially if you have good or excellent credit. For instance, you can get a loan through a dealership, bank, or credit union, plus you have a variety of online options, like MyAutoLoan for comparing rates among different lenders.

Dealerships may be the most convenient places to get an auto loan, but banks, credit unions, and other such financial institutions often offer better terms, lower interest rates, and friendlier customer service. Plus, you may already know that

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MORE:

Autopay auto refinance

How to find cheap car insurance for your new-to-you ride

Ensuring you get the best auto loan rates will save you money on total interest over the life of your loan. But if you’ve just spent hours searching for the best deal on car loans, starting a new search for the best rates on

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What’s considered a good interest rate for a used car?

There’s no one right answer to this question, as interest rates are calculated based on a wide variety of factors. Instead, a good interest rate for a used car is one that is fair for both the lender and the borrower.

How can you get a better interest rate?

If you’re unable to get approved for a lower rate on your own, getting a cosigner for your loan could help you secure better terms. If that’s not an option, you may also consider settling for a higher rate now, then refinancing after you’ve had a chance to repair your credit.

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