Here are some grim facts to ponder over to get a sense of the car market and what the car-buying experience is really like in 2026. New car prices have now hit new highs (not good), monthly payments have also hit a record high (also not good), the number of people falling behind on their car loan payments continues to rise rapidly (very not good), and car repossessions are up by double-digits (very, very not good). So, tempted as you might be by the new Mazda CX-5, ask yourself this: What is the average APR for a car loan?
And… how high of an APR is just too high? Combine this with 70-month car loans, rising costs of living, high borrowing costs, and shrinking savings, and as a consumer, prudent, careful spending is more important now than it’s ever been. You need to get a sense of where your financial limit is when you’re applying for a car loan before you drop a wad of cash and sign on the dotted line. Luckily, with a good credit score, some patience, and some clever strategizing, you might still get an attractive APR on that new car loan.
What Is APR On A Car Loan?
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When you’re applying for an auto loan, or if you’re comparing what financing options are on offer for a particular car you’re eyeing right now, you might have noticed a familiar term that keeps cropping up: APR.
The Annual Percentage Rate (APR) basically measures the total yearly cost of borrowing, and this is essentially a calculation used for most loans, including a car loan. When you’re applying for an auto loan, the APR refers to the interest charged by the bank or lender for the amount you’re borrowing to buy a car.
So, what is a good APR for a car loan? More on that in a bit, but for now, all you have to remember is this: the lower the APR, the cheaper it is to borrow money and the cheaper it is to finance that new or used car purchase you’ve been dreaming about.
Remember that the APR is different from loan interest rates! When you’re trying to keep track of your spending, the APR is actually a more accurate way of knowing how much it is costing you to finance a car. The interest rate is only a percentage of the principal (i.e. the basic amount you’re borrowing), while the APR also includes any fees and additional costs that go on top of the principal when you’re applying for a car loan.
What Is A Good Credit Score To Get A Low APR?
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Numerous different factors affect your average APR for a car loan (more on this in a bit), but the most critical variable, by far, is your credit score.
For context, your credit score is a three-digit number that ranks your creditworthiness. In other words, it scores how risky you are as a borrower and how likely you are to repay your car loan payments on time. So, what you want here is a higher credit score, and the higher it is, the lower your APR will be when you’re trying to apply for an auto loan.
Some of the other perks of a higher credit score you might get to enjoy include reduced monthly payments (on top of the lower interest rates and lower APRs), easier application approvals, lower down payments, fewer additional costs and extra fees, and you might even get the luxury to customize your auto loan length and terms.
Although different banks and lenders may rely on different credit score models, they are often grouped fairly similarly, so here’s what it looks like (from high to low):
- 800 to 850: Exceptional
- 740 to 799: Very Good
- 670 to 739: Good
- 580 to 669: Fair
- 300 to 579: Poor
Now, some banks and lenders might classify these credit scores a bit differently, but the thinking here is pretty much the same (from high to low):
- 781 to 850: Super Prime
- 661 to 780: Prime
- 601 to 660: Nonprime
- 501 to 600: Subprime
- 300 to 500: Deep Subprime
As a general rule of thumb, a good credit score that you should aim for if you’re looking for the best loan terms and the lowest APRs is either at least 670 (Good) or 661 (Prime), or ideally, even higher.
What Is The Average APR For A Car Loan In 2026?
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The average auto loan APRs for both new and used cars, sorted by credit score, mentioned below, are based on Experian’s auto loan credit report data as of Q1 2026, and are correct as of writing. These may be subject to change without notice.
What is a good APR for cars? Well, when we cross-reference those credit scores from earlier, and since your auto loan APR is heavily tied to your credit score, we can get a good idea of what your average APR will be for an auto loan, depending on which credit score band you belong to.
This also underscores just how much of a difference a good or high credit score makes in helping you get lower APRs on your auto loan compared to a bad or low credit score. According to Experian’s credit report data (as of Q1 2026), here are the average APRs for an auto loan based on credit score for both new and used cars (from high to low):
- 781 to 850 (Super Prime): 4.55% (New) / 6.30% (Used)
- 661 to 780 (Prime): 6.23% (New) / 8.77% (Used)
- 601 to 660 (Nonprime): 9.67% (New) / 14.03% (Used)
- 501 to 600 (Subprime): 13.44% (New) / 19.42% (Used)
- 300 to 500 (Deep Subprime): 16.01% (New) / 21.77% (Used)
The average APR on used car loans is normally higher than new car loans because it’s harder to estimate the resale value of a used car, and a used car is a riskier investment due to the higher likelihood of faults and it breaking down. Nonetheless, the lower prices of used cars might help you offset those higher APRs, so your monthly loan payments are usually lower than buying a new car.
How To Get A Lower Interest & APR On A Car Loan?
There are many variables that banks and lenders take into account when calculating the average APR for a car loan, some of which you could influence, while others are mostly out of your control:
1. Poor Economic Conditions: When there’s high inflation, the Federal Reserve raises rates to curb consumer borrowing and spending, and consequently, auto loan interest rates and APR go up. If possible, you should wait for the market to settle and improve.
2. Different Lender/Bank Policies: Different banks and auto lenders have different criteria for calculating your interest rates and APRs, so consider shopping around or getting pre-approved when you can to see who could offer you the best deal. You then have to think about whether you want to take a fixed-rate loan or a variable-rate loan.
3. Bad/Low Credit Score: If your credit score and creditworthiness are poor, then you will have a hard time scoring lower interest rates and APRs. Try improving your credit score or applying with a co-signer who has a good credit score as a possible workaround.
4. Loan Amount & Terms: The more you borrow (i.e. the pricier the car) and the longer the repayment term, the riskier you are to the bank or lender, and thus, the higher the APRs and interest rates will be. If you can, try applying for a shorter repayment term or even putting a higher down payment upfront (which also protects you from negative equity).
5. Dealership Extras: Add-ons like extended warranties, gap insurance, or dealer options will push up your principal (borrowed) amount, and lo and behold, your interest rate and APR will go up with it, too. You should try negotiating to have as many of these options removed as possible.
Sources: TopSpeed, HotCars, Experian, Investopedia, NerdWallet, Macrotrends
FAQ
Q: What’s a good APR rate for a vehicle?
To secure a good APR for an auto loan, the trick here is your credit score. The higher your credit score, the lower the APR, as banks and lenders see you as a low-risk borrower, and they’re willing to offer you a more generous APR for an auto loan. For example, if you belong to the highest credit score category (Super Prime = 781 to 850 credit score), based on Experian’s data (as of Q1 2026), the average APR is 4.55% for a new car or 6.30% for a used car, which is pretty good.
Q: Is 11.9% APR high?
While not terribly high, relatively speaking, an 11.9% APR for an auto loan is still quite high, although that might depend on whether you’re buying a new or used car. The APR on new car loans is usually lower than the APR on used car loans, and according to Experian’s credit report data (as of Q1 2026), the overall average APR is 6.39% for new cars and 11.43% for used cars. So, if you’re buying a new car, 11.9% is a very high APR, though it’s average if you’re buying a used car.
Q: What APR will I get with a 700 credit score for a car?
Although there are umpteen different variables that’ll affect the average APR for a car loan, including your credit history and creditworthiness, which is separate from your credit score, your credit score is nevertheless the biggest force multiplier here. Using Experian’s data (as of Q1 2026), a 700 credit score will put you in the Prime category, and the average APRs here are 6.23% for new car loans and 8.77% for used car loans.
Q: Is 20% APR high on a car?
For an auto loan, regardless of whether you’re buying a new or used car (bear in mind that used car loans normally have higher interest rates and APRs than new car loans), a 20.9% APR is exceptionally high, likely due to a low credit score. According to Experian’s data (as of Q1 2026), it shows that the lowest credit score band (Deep Subprime = 300 to 500 credit score) has an average APR rate of 16.01% for new car loans and 21.77% for used car loans.
