A good Annual Percentage Rate (APR) for a new car loan currently falls below 4% for borrowers with excellent credit, while a rate under 6% is generally considered good for a used car loan. The best APR you can get is highly dependent on your credit score, the loan term, and whether you're buying new or used. For most people, securing an APR that is at or below the average rates for their credit tier is the primary goal.
Your credit score is the single most important factor. Lenders use it to assess risk, and even a small difference can mean hundreds or thousands of dollars in interest over the life of the loan. The following table outlines typical APR ranges based on credit tiers as of late 2023, using data from sources like Experian and Edmunds.
| Credit Score Tier (FICO) | Typical New Car APR | Typical Used Car APR |
|---|
| Super Prime (781-850) | 2.5% - 4.5% | 3.5% - 5.5% |
| Prime (661-780) | 4.5% - 6.5% | 6.0% - 9.0% |
| Non-Prime (601-660) | 7.0% - 11.0% | 10.0% - 15.0% |
| Subprime (501-600) | 11.0% - 16.0% | 15.0% - 20.0% |
| Deep Subprime (300-500) | 15.0%+ | 19.0%+ |
Beyond your credit score, the loan term significantly impacts the rate. Shorter loan terms, like 36 or 48 months, often come with lower APRs compared to longer 72 or 84-month terms. While a longer term lowers your monthly payment, you'll pay much more in total interest. To get the best rate, focus on improving your credit score before applying, get pre-approved from a credit union or bank, and compare those offers with any financing from the dealership. Always negotiate the car price separately from the financing terms.
