What Is a Good APR for a Car Loan?
Rate benchmarks by credit tier, what moves your offer, and how to land below the average.
A good car loan APR depends on your credit tier: excellent-credit borrowers see the lowest advertised rates, often in the 5 to 7 percent range for new cars in recent markets, while subprime borrowers can be offered 12 percent or more. New cars price lower than used, shorter terms price lower than longer ones, and a bank pre-approval is the fastest way to benchmark any dealer offer.
Benchmarks by credit tier
Lenders sort borrowers into tiers, and the APR follows the tier. Excellent credit (roughly 780+) gets the best advertised rates. Good credit (670-779) lands a point or two higher. Fair credit (580-669) pays noticeably more, and subprime (below 580) can see rates in the teens or higher, if approved at all.
These move with the broader rate environment, so treat any specific number as a snapshot. The durable rule: your tier relative to the market average matters more than the absolute number. Beat the average for your tier and you did well.
New vs used vs term
New cars get lower APRs than used cars at every credit tier, because new collateral holds value better and manufacturers subsidize promotional rates. Shorter terms also price lower: a 36-month loan usually beats a 72-month loan by a point or more from the same lender.
Promotional 0 percent or low APR deals exist, but they apply to specific models and top-tier credit, and they often require giving up a cash rebate. Compare the total of payments with and without the promo before choosing.
What moves your personal offer
Credit score is the biggest lever, then down payment size, then term length. A bigger down payment lowers the lender's risk and can nudge the rate down. Shorter terms signal lower risk too. Stable income and low existing debt help at the margins.
What hurts: long terms on used cars, small down payments, and rolling negative equity into the loan. Each one raises the lender's risk and your rate follows.
How to get a lower rate
Get pre-approved from your bank or a credit union before visiting the dealer. That rate is your walk-away benchmark; dealers make money on financing and will often beat a competing offer to keep the loan in-house.
If your credit is close to the next tier up, even a small score improvement can matter: paying down a card balance before applying can move the needle within a billing cycle or two. And never negotiate rate and price in the same breath; settle the out-the-door price first, then talk financing.
Skip the arithmetic
See what any APR costs you with the free auto loan calculator.
APR questions
What APR should I expect with a 700 credit score?
A 700 score sits in the good tier, so expect a rate a point or two above the best advertised excellent-credit rates for the same car and term. The fastest way to know your real number is a pre-approval from your bank or credit union, which also gives you a benchmark to beat at the dealership.
Is 10% APR bad for a car loan?
It depends on your tier. For excellent credit on a new car, 10 percent is high and worth shopping. For fair credit on a used car, it can be a normal market offer. Judge any rate against the average for your credit tier and the car type, and get a competing quote before accepting.
Does a longer term mean a higher APR?
Usually yes. Longer terms mean the lender's money is at risk longer while the collateral depreciates, so 72- and 84-month loans typically carry higher APRs than 36- or 48-month loans from the same lender for the same borrower.