What is a Good APR for a Car Loan?

Getting a car loan is an exciting step but it also requires careful consideration. One of the most important factors when taking out an auto loan is the annual percentage rate (APR). The APR encompasses not only the interest rate but also any fees and costs associated with the loan. So what exactly is a good APR for a car loan? Keep reading to find out.

What Does APR Mean?

APR stands for annual percentage rate. This percentage represents the total cost of a loan, including:

• Interest rate
• Origination fees
• Discount points
• Processing fees
• Underwriting fees
• Any other charges

Essentially, the APR shows the true cost of borrowing by factoring in both the interest rate and fees. It allows you to accurately compare loan offers from different lenders.

While shopping for a car loan, it’s important to compare APRs rather than just interest rates. Focusing only on interest rate can make a loan seem cheaper than it really is once you account for the fees.

What is a Good APR for a New Car?

Determining a good APR for a new car loan depends largely on your credit score. The higher your credit score the lower APR you can qualify for.

Here are the average new car loan APRs by credit score, according to Experian in the first quarter of 2025:

• Superprime credit (781-850): 5.18%
• Prime credit (661-780): 6.70%
• Nonprime credit (601-660): 9.83%
• Subprime credit (501-600): 13.22%
• Deep subprime credit (300-500): 15.81%

As a general guideline

• Excellent credit (720 score and above): 3-7% APR
• Good credit (690-719 score): 4-8% APR
• Average credit (620-689 score): 6-12% APR
• Poor credit (below 620 score): 10-20%+ APR

The best rates are usually below 5%. So if you have good credit, target a new car loan APR under 5%. With excellent credit in the 750+ range, aim for 4% or lower.

What is a Good Used Car Loan APR?

Used car loans tend to have higher APRs than new cars. Lenders view used car loans as riskier, so you’ll pay more in interest and fees.

Here are the average used car loan APRs by credit score in the first quarter of 2025, per Experian:

• Superprime credit: 6.82%
• Prime credit: 9.06%
• Nonprime credit: 13.74%
• Subprime credit: 18.99%
• Deep subprime credit: 21.58%

For a used car, good APRs by credit score tier are:

• Excellent credit: 5-9%
• Good credit: 7-11%
• Average credit: 9-14%
• Poor credit: 14-22%+

Aim for a used car loan APR under 10% if you have excellent credit. With good credit in the low 700s, target under 12%.

What APR Can You Get with No Credit History?

If you have never had a car loan or credit card, you will not have established credit. Lenders view no credit history as risky. Without a credit score, here are the APR ranges you can expect:

• New car loan: 8-16%
• Used car loan: 12-20%

Having a co-signer with good credit can help you get better rates. Interest rates are also higher for longer loan terms. With no credit, it’s smart to put down as big of a down payment as possible to get the best APR.

Tips for Getting a Low APR

While your credit score is the primary factor in your APR, there are some other things you can do to ensure you get the lowest rate possible:

• Shop around: Compare APR offers from multiple lenders, including banks, credit unions, and online lenders. Avoid just going with the first offer.

• Improve your credit: Pay bills on time and pay down debts in the months before applying for an auto loan. Even small score boosts can mean better rates.

• Shorten the loan term: Opt for a 36 or 48 month loan rather than 60 or 72 months. Shorter terms mean lower rates.

• Make a large down payment: Putting 20% or more down signals you are lower risk, which earns lower APRs.

• Use an auto refinance calculator: If your credit has improved since you got your existing car loan, you may be able to refinance for a lower rate.

Is a Higher APR Worth It for Some Buyers?

While most buyers aim for the lowest APR possible, there are certain situations where it may make sense to accept a higher rate:

• If you need a longer loan term (such as 72-84 months) to afford the monthly payment, the higher APR may be justified.

• If you have poor credit, it may be challenging to find any lender willing to finance you. In that case, accepting a higher APR may be your only option outside of saving up to buy in cash.

• If you want a specific new car model in high demand, and the dealer’s financing offer gets you the car, the higher rate could be worth it.

However, it’s still smart to compare other lender rates to make sure you aren’t overpaying more than required. Carefully weigh if the higher cost is worth it to you.

Bottom Line

Finding a good APR ultimately comes down to your credit. Excellent credit gets the lowest rates, while poor credit leads to higher APRs. New cars tend to have lower APRs than used cars. Improving your credit, shopping lenders, and making a large down payment can help you land the best auto loan rate. Use APR as the benchmark, not just interest rate, to find the real cost of a loan.