Your auto loan interest rate can save or cost you thousands over the life of your loan. Here's where to find the best rates and how to qualify for them.
Current Average Auto Loan Rates (January 2025)
| Credit Score | New Car Rate | Used Car Rate |
|---|---|---|
| 781-850 (Super Prime) | 5.64% | 7.66% |
| 661-780 (Prime) | 7.01% | 9.73% |
| 601-660 (Nonprime) | 10.53% | 14.18% |
| 501-600 (Subprime) | 14.17% | 18.89% |
| 300-500 (Deep Subprime) | 17.68% | 21.55% |
Best Lenders by Category
Best Credit Unions
Credit unions typically offer the lowest rates:
- PenFed Credit Union: Rates from 5.24% APR
- Navy Federal: Rates from 5.49% APR
- Alliant Credit Union: Rates from 5.99% APR
Best Online Lenders
- LightStream: Competitive rates, no fees
- Capital One Auto: Easy pre-qualification
- Carvana: Convenient if buying through their platform
Best Banks
- Bank of America: Rate discounts for existing customers
- Chase Auto: Relationship discounts available
- Wells Fargo: Wide network of dealers
How to Get the Best Rate
- Check your credit score: Know where you stand before applying
- Get pre-approved from multiple lenders: Compare at least 3 offers
- Apply within 14 days: Multiple inquiries count as one if within this window
- Use pre-approval as leverage: Dealers may beat outside offers
- Choose shorter terms: Often come with lower rates
Dealer Financing vs. Bank/Credit Union
Dealer financing pros:
- Convenience of one-stop shopping
- Special manufacturer incentives (0% APR, cashback)
- May work with lower credit scores
Direct lender pros:
- Often lower rates than dealers
- Know your rate before shopping
- More negotiating power at dealership
How Much Can You Save?
On a $30,000 loan for 60 months:
- 8% APR: $608/month, $6,480 total interest
- 6% APR: $580/month, $4,800 total interest
- Savings: $1,680
The Bottom Line
Start with credit unions for the best rates, then get pre-approved from 2-3 lenders before visiting dealerships. The small effort can save thousands.
