Car Loan Interest Rate in 2026: What to Know

Key takeaways:

Current average car loan interest rates are 6.5% for new cars and 11% for used vehicles.
Your credit score, credit history, and loan terms can affect your interest rate.
Refinancing your car loan may lower your monthly payment or help you secure a better interest rate.

Car loan interest rates can feel like a lottery, especially if you’re new to auto financing. If the odds are in your favor, you may be able to get a prime car loan rate. If not, you’ll get stuck with higher monthly payments.

In reality, auto loan rates aren’t random. In this guide, we’ll dive into the ins and outs of car loan interest rates. We’ll also discuss average car loan interest rates by credit score and how you can get the best rate on your loan.

But first, let’s take a look at what interest is in the context of a car loan and how it’s calculated.

What is the interest rate on a car loan and how does it work?

Car loan interest is essentially the “rent” you pay to borrow money from a bank, credit union, or lending company. It’s often included in the total cost of your loan, which is your annual percentage rate (APR).

The interest varies based on several factors, including the amount of money you borrow, how long you borrow it, and your financial track record. For instance, if you have a solid history of repaying loans on time and keeping your debt to a minimum, you’ll likely qualify for a lower interest rate. That’s because you represent less risk to your lender.

The opposite is also true. If your credit report shows numerous red flags, such as missed payments or loans in default, you represent more risk to your lender. Your interest rate will likely be higher.

What’s the average interest rate on a car loan in 2026?

In 2026, the average rate on a car loan falls around 6.5-7% for new cars and 11-12% for used cars. However, your rate may change based on several factors:

Your credit score
The length of the loan
Your decision to purchase a new or used vehicle

Average car loan interest rate by credit score

You won’t know exactly how much interest you’ll pay until you submit your loan application and get approved for a loan. However, you can get a rough estimate of your APR based on your credit score.

Your credit score is a 3-digit number ranging from 300 to 850. Higher scores are considered better because they represent a good credit history. Lower scores tend to indicate a poor financial track record.

If your credit score is high and you land in the super-prime range, you’re more likely to qualify for a low interest rate (think, below 3% for a new car and 4% for a used car). But if your score falls below 600 and you land in the subprime range, you could get a rate of 10% or higher. This will result in more expensive monthly payments.

If your credit score is higher than 781, creditors would say you have a super-prime credit rating. Borrowers with super-prime credit ratings tend to get approved for loans with the lowest interest rates available.

Rates usually increase as you move downward through the ranges (prime, near prime, subprime, and deep subprime). Borrowers with deep-subprime scores receive the highest interest rates.

Let’s take a closer look at the average rate for a car loan based on your credit score:

Credit Score	New Car Loan	Used Car Loan
781 or higher	4.66%	7.70%
661-780	6.27%	9.98%
601-660	9.57%	14.49%
501-600	13.17%	19.42%
300-500	16.01%	21.85%

Source: Experian Auto Finance Insights: State of the Automotive Finance Market

Interest rates based on loan length

Shorter loan terms tend to come with higher monthly payments because you have less time to repay your loan. Longer-term loans have higher interest rates because you “rent” the money for a longer period.

For example, the average interest rate on a 6-year car loan is about 0.3% higher than the rate on a 3-year loan.

Average interest rate on new cars vs. used cars

Did you know deciding to buy a new or used car can impact your interest rate? In fact, it’s one of the most important factors lenders consider when setting your rates.

The average interest rate on new cars tends to be lower because a new car is less likely to break down. Used cars often come with higher interest rates because they’re considered riskier investments. Still, the lower sales prices may balance out higher interest rates.

What’s a good interest rate on a car loan?

Truthfully, there’s no single “good” interest rate on a car loan. Instead, your rate is based on factors like your credit score, credit history, and average market rates.

Instead, you can determine if you have a good interest rate by checking the average APR for your credit score. If you have excellent credit and received a new car loan offer with a 10% interest rate, you can likely qualify for a lower rate elsewhere.

Similarly, if you have a good credit score and receive an offer with a prime rate, you’re probably getting a good deal.

How to get the best car loan interest rate

Car prices hit record highs in 2026, making it even more important to get the best rate on a vehicle loan. Fortunately, you don’t have to rely on the luck of the draw. Instead, consider the following tips to help you get the best rate possible:

1. Get familiar with your credit score

Knowledge is power, especially when it comes to your credit score. Unfortunately, many people aren’t sure how to check theirs.

Your bank or credit card company may provide you with a free credit score. You can also check it for free on numerous websites. Just make sure to review the terms and avoid any sites that require a credit card.

After reviewing your credit score, compare it to the average auto loan interest rates listed above. You may not be able to determine your exact rate until you get approved for a loan. But you’ll have a better idea of how much your monthly payments could be.

2. Shop around for the best rates

It’s tempting to accept the first loan offer you receive, especially if you need a new car. However, taking the time to research your options can really pay off. With that in mind, shop around and compare offers from multiple lenders first.

Some auto retailers offer special rates for in-house financing. You may also be able to get a better deal from your bank or credit union, especially if you’ve been a customer for years. You may even find good loan terms from an online lending platform.

3. Make a larger down payment

Did you know your down payment can affect the interest rate on your auto loan? Typically, putting more money down upfront means you’re less of a risk. Saving up to make a larger down payment isn’t easy, but you may be able to qualify for a better rate if you do.

4. Boost your credit score

Your credit score can impact some important parts of your life. Luckily, there are steps you can take to boost it. Find tips and tricks in our guide to building excellent credit. In the meantime, look out for ways to pay off debt and prioritize making timely payments on existing lines of credit.

5. Renegotiate your terms

Some loan providers and financial institutions allow you to revisit your loan terms after a certain period of time. If that’s the case, you may be able to negotiate a lower interest rate, lower car payments, or a shorter loan term to help you save. You could also agree to set up automatic payments in exchange for discounted rates.

6. Refinance your auto loan

If you’ve financed a car loan and your rate is higher than average based on your credit score, don’t worry. You may be able to refinance your auto loan and get a lower rate.

When you refinance an auto loan, you replace your original loan with a new car loan. Ideally, your auto refinance loan will have better terms, like competitive rates or more affordable monthly payments.

Almost anyone can apply to refinance a car loan, as long as their name is on the title. However, refinancing can makes more sense for some borrowers. For instance, it’s a good idea to refinance if your credit score has increased or your financial circumstances have improved. You’re more likely to qualify for a loan with a prime or super prime rate.

And if your financial situation hasn’t improved, don’t worry. You may still be able to refinance your car loan and get a lower rate or get out of an upside-down auto loan.

Want better car loan interest rates? Start here

Interest rates may be rising, but that doesn’t mean you’re stuck with a high interest rate forever. Even if you recently signed onto a new auto loan with a higher rate, you may be able to refinance your loan and find a better deal.

A personal loan could also help consolidate higher-interest debts into a single monthly payment, potentially freeing up room in your budget and making it easier to manage car payments. Learn more about your loan options through Upstart and check your personal loan rate online in minutes.

Upstart Network, Inc. (NMLS #936133) is not a lender. All loans on its marketplace are made by regulated financial institutions.

All mortgage lending is conducted by Upstart Mortgage, LLC dba Upstart Home Lending. (NMLS #2443873). Equal Housing Opportunity.

Checking your rate won’t affect your credit score: When you check your rate, we check your credit report. This initial (soft) inquiry will not affect your credit score. If you accept your rate and proceed with your application, we do another (hard) credit inquiry that will impact your credit score. If you take out a loan, repayment information may be reported to the credit bureaus.
Upstart’s model considers education: Neither Upstart nor its lending partners have a minimum educational attainment requirement in order to be eligible for a loan.
41% more approvals and 33% lower rates than a traditional model: As of publication in April 2026, and based on a comparison between the Upstart model and a hypothetical traditional model using Upstart data from Jan – Dec 2025. For more information on the methodology behind this study, please see Upstart’s Annual Access to Credit results here.
Unsecured Loans: While most loans through Upstart are unsecured, certain lenders may place a lien on other accounts you hold with the same institution. There may be an option to secure your personal loan through Upstart with your vehicle, which will require a lien to be placed on the vehicle. It is important to review your promissory note for these details before accepting your loan.
Loan amounts from $1,000 -$75,000: Your loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will qualify for the full amount. Minimum loan amounts vary by state: GA ($3,100), HI ($1,500), MA ($7,000). Maximum loan amounts may vary by state.
Closing and funding timeline: In April 2026, 10% of funded HELOCs achieved a closing timeline of 2 days or less and a funding timeline of 7 days or less. This timeline assumes consumers close with our remote online notary, provide supporting documentation promptly, and ensure the information provided is accurate and consistent with our verification process. Delays, discrepancies, and other unforeseen factors may impact the closing timeline. MBA’s 2025 Home Lending Study reports an average industry closing time of 37 days.
APRs from 6.2% – 35.99%, with 3 or 5 year terms: The full range of available rates varies by state. The lowest rates are only available to the most qualified applicants. A representative example of payment terms for an unsecured Personal Loan is as follows: a borrower receives a loan of $10,000 for a term of 60 months, with an interest rate of 17.50% and a 7.25% origination fee of $725, for an APR of 21.23%. In this example, the borrower will receive $9275 and will make 60 monthly payments of $252. APR is calculated based on 5-year rates offered in March 2026. There is no downpayment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved.
Instant deposits: To receive instant funding, your bank account must support instant transfers. If your account does not support instant transfers, funds will be available to you depending on your bank’s transaction processing time and policies.
Always On Commitment: We are committed to maintaining your credit limit as long as you continue to meet program eligibility and account requirements. To ensure the safety and security of all our members, we reserve the right to adjust or close lines in specific circumstances, including account default or late payments, suspected fraud, violation of our terms of service (including abusive behavior), or when necessitated by legal or regulatory requirements.
Cash Line draws: You may request a draw at any time. Only one draw may be outstanding at a time; after it is fully repaid, you may request another.
HELOC APRs as low as 6.52%: Terms shown here are subject to change without notice. APRs for initial advances range from 6.52% to 18.00% based on rates offered as of April 2026. The lowest rate is only available to consumers willing to become a member of a credit union and to those who meet a minimum FICO score of 780, CLTV under 70%, and DTI under 45%. Your actual rate will depend on many factors such as your credit history, combined loan-to-value ratio (CLTV), line amount, loan term, lien position, and property state. Origination fee to open an account is between 0% and 4.99% of the approved credit limit. The Annual Percentage Rate (“APR”) is variable and based on the Prime Rate as published in the Wall Street Journal “Money Rates” table plus or minus a margin. Your APR will never be less than 3.99% or greater than 18.00%. Property insurance is required.
No annual fee, prepayment penalty, or fees to redraw: Terms shown here are subject to change without notice. Origination fee to open an account is between 0% and 4.99% of the approved credit limit. The Annual Percentage Rate (“APR”) is variable and based on the Prime Rate as published in the Wall Street Journal “Money Rates” table plus or minus a margin. Your APR will never be less than 3.99% or greater than 18.00%. Property insurance is required.
2,500+ Variables:As of 3/31/2026. “Variables,” often also referred to as “features,” refers to raw variables and combined variables considered in our AI models. A “raw” variable is a non-combined, conceptually distinct unit of data, such as “applicant-reported savings.” A “combined” variable is data that has been transformed, combined, or otherwise engineered from a raw variable or set of raw variables, such as “applicant-reported savings” divided by “loan amount.
Fully automated loans: In Q2 2026. Percentage of Loans Fully Automated, which is defined as the total number of loans in a given period originated end-to-end (from initial rate request to final funding for personal loans and small dollar loans, and from initial rate request to signing of the loan agreement for auto loans) with no human involvement required by the Company divided by the Transaction Volume, Number of Loans in the same period.

Car Loan Interest Rates in 2026: What to Know