Is 1.9% APR on a car good?

[SanHadley]

Yes, a 1.9% APR for a new car loan is an excellent rate in today’s market, typically offered as a manufacturer-sponsored promotional deal. It signifies strong credit eligibility and represents significant savings compared to average rates. However, its value must be weighed against alternative incentives like cash rebates.

The annual percentage rate (APR) is the total yearly cost of borrowing, including fees. As of early 2024, the average APR for a new car loan for a borrower with prime credit (a FICO score of 661-780) is approximately 6.58%. A promotional 1.9% APR is substantially lower, directly reducing your finance charges. For a $35,000 loan over 60 months, the difference is stark:

Loan Amount	Term	6.58% APR (Avg. Prime)	1.9% APR (Promo)	Total Interest Saved
$35,000	60 months	~$6,100	~$1,700	~$4,400

This rate is almost exclusively available on new vehicles as a manufacturer incentive to move specific models or trim levels. You will likely need a very good to excellent credit score, usually a FICO score of 740 or higher, to qualify. Lenders use these low rates as a reward for low-risk borrowers.

The critical decision point is often choosing between the low APR offer and a competing cash-back incentive. For example, you might be offered a $3,000 cash rebate or the 1.9% financing. If you have the means to secure a competitive loan elsewhere, taking the cash and using it for a larger down payment or a separate loan might yield a better overall financial outcome. You must calculate the total cost both ways.

In the current economic climate with elevated interest rates, a 1.9% offer is a standout deal. It locks in predictable, low payments for the loan's life, which is a considerable advantage if you plan to keep the vehicle long-term. It provides a buffer against potential future rate hikes from central banks.

Always read the fine print. These promotional rates are usually for specific terms, commonly 36, 48, or 60 months. Extending the loan term might not qualify for the special rate. Ensure there are no hidden fees that could offset the interest savings. The best practice is to get pre-approved for a loan from your bank or credit union to have a baseline rate for comparison before visiting the dealership.

[SanThomas]

Just went through this myself. My credit union offered me 5.5% for a new SUV. At the dealership, they said I qualified for the manufacturer’s 1.9% deal because my score was over 750. I ran the numbers – it saved me thousands over the life of the loan compared to my credit union’s rate. For me, it was a no-brainer. The monthly payment dropped by a good chunk, which fits my budget better. I’d say if your credit is solid and you’re looking at a new car, 1.9% is a green light. Just make sure the car itself is the right fit and a good value.

[DiErin]

From a financial planning perspective, a 1.9% APR is a highly efficient borrowing cost. In an environment where high-yield savings accounts can sometimes offer comparable or even higher returns, financing at this rate can be strategically sound. It allows you to preserve your capital for other investments that may yield a greater return than the interest cost of the car loan.

The key is opportunity cost. If you have $35,000 in cash, using it to buy the car outright avoids interest but ties up that capital. Financing at 1.9% and investing that $35,000, even conservatively, could potentially result in a net gain over time. This logic applies primarily to those with disciplined investment habits. For most, the guaranteed savings versus a standard auto loan is the more tangible and advisable benefit. It’s a low-cost liability.

[StLucy]

I work in auto financing. When we see a 1.9% APR offer from a manufacturer, we tell customers it’s one of the best deals on the market—but it’s not for everyone. The approval tier is strict. We’re talking top-tier credit only. If your score is borderline, you might not get it. Also, these offers are model-specific and often on last year’s inventory. My advice? Don’t fall in love with the rate before you know you qualify. Check your credit report first. And always ask: is there a cash alternative? Sometimes, especially on a shorter loan term or with a big down payment, the cash rebate is the better math.

[Howard]

Let’s talk about the long-term savings, because that’s what matters. I’m all about minimizing total cost. On a $30,000 loan for five years at an average rate of, say, 7%, you’d pay over $5,600 in interest. At 1.9%, you’d pay less than $1,500. That’s more than $4,000 staying in your pocket. That money could cover insurance, maintenance, or fuel for years. For me, a rate this low changes the calculus on whether to buy new or used. A new car with 1.9% financing might have a similar total ownership cost over five years as a used car with a much higher interest rate. It makes the new car warranty and latest features more financially accessible. You’re paying for the car, not the financing.