What Is a Good Car Loan Rate in 2025? Average Rates by Credit Score & How to Qualify

Understanding what constitutes a good car loan rate is more important than ever in 2025. With car prices high and interest rates shifting, knowing what counts as a fair rate can save you thousands.

Currently, the average car loan rate is approximately 6.35% APR for new vehicles. For used cars, the rate is closer to 11.62%. These numbers vary based on your credit, loan term, lender, and vehicle.

Key Factors That Affect Your Car Loan Rate

Your credit score is key. Super-prime borrowers (781-850) may get rates around 4.77% (new) or 7.67% (used). Deep subprime borrowers (under 500) might see rates above 15%.

Loan length also plays a role. Shorter terms usually have lower rates but higher monthly payments. They're seen as lower risk to lenders.

Car age matters too. Older used cars often have higher rates. New cars tend to get better offers.

Larger down payments reduce what you borrow, and lenders often reward that with lower rates.

Your lender choice is important. Credit unions often offer better rates than banks. Online lenders are also worth checking. Moreover, some fintech platforms provide flexible options with fast approval timelines..

Average Auto Loan Interest Rates by Credit Score (2025)

Digital Lenders & Pre-Qualification Tools

Online tools allow you to check car loan offers without affecting your credit. Sites like Auto Navigator and myFICO give real-time estimates.

The Consumer Financial Protection Bureau also offers worksheets to compare lenders. Visit consumerfinance.gov.

Even better, many of these tools compare monthly payments, terms, and total interest costs. As a result, you can make more confident decisions.

Real-Life Examples

One Reddit user locked in 1.9% APR on a new SUV thanks to an 800+ credit score and pre-approval from a credit union.

Another shopper landed 5.35% on a used car by comparing rates and asking the dealer to match a better offer.

Amy, a new mom, used a 0% interest credit card to buy a car, paying it off within the promotional period and avoiding interest entirely.

These stories demonstrate how preparation and timing can help secure a favorable car loan rate, regardless of your credit tier.

Promotions to Watch

Carmakers are offering limited-time deals:

• Honda: 0% APR on Civics and CR-Vs.
  
  
• BMW: 1.99% APR on 48-month X7 loans.
  
  
• Chevy: 0% APR for 60 months on Silverado EVs and Tahoes.
  
  

Because these deals are tied to credit qualifications, always ask for the rate that fits your profile.

Tips to Secure a Good Rate

• Check your credit and fix any errors.
  
  
• Get pre-approved to gain leverage.
  
  
• Compare multiple lenders.
  
  
• Add a co-signer if needed.
  
  
• Choose a shorter term if possible.
  
  

Additionally, if you have time before you need a car, improving your credit score slightly helps you qualify for lower rates.

Watch the Fed

Rates change with the economy. When the Fed raises rates, lenders follow. If you're on the fence, locking in sooner might help. On the other hand, if rates are trending downward, you might wait for better terms.

Final Thoughts

So, what is a good car loan rate? For new cars, aim under 6%. For used, under 10% is solid if your credit is good.

Your credit, loan term, down payment, and lender all matter. Take time to shop around. Even a 1% APR difference can mean hundreds saved.

Being informed gives you the power to find what is a good car loan rate for your budget and credit profile. And when you're ready, you'll not only qualify for better terms but also feel more confident about your decision.

References:

1. Experian. (2024). State of the Automotive Finance Market Q4 2024. Retrieved from https://www.experian.com
   
2. Consumer Financial Protection Bureau. (2025). Auto Loan Shopping Worksheet. Retrieved from https://www.consumerfinance.gov
   
3. LendingTree. (2025). Average Car Loan Interest Rates. Retrieved from https://www.lendingtree.com
   
4. Reddit. (2025). What Interest Rates Are People Actually Getting? Retrieved from https://www.reddit.com/r/carbuying
   
5. The Times UK. (2025). Want a New Car? Here Are the Best Ways to Borrow Money. Retrieved from https://www.thetimes.co.uk
   
6. Capital One. (2025). Auto Navigator Pre-Qualification Tool. Retrieved from https://www.capitalone.com/cars
   
7. CarEdge. (2025). Best Auto Loan Rates in May 2025. Retrieved from https://caredge.com‍
8. Investopedia. (2025). Best Honda Loan and Lease Deals. Retrieved from https://www.investopedia.com