Understanding Used Car Loan Rates by Credit Tier

Typical Rate Ranges by Credit Tier

Used car loan rates vary by credit score because lenders use risk-based pricing: they set interest rates based on the estimated risk that you will not repay the loan.

For borrowers with lower credit scores—often called subprime—the Consumer Financial Protection Bureau (CFPB) reports average annual interest rates between about 9% and 20%, depending on the type of lender. This range, from CFPB research, gives a benchmark for the subprime tier.

For excellent, good, and fair credit tiers, the CFPB does not publish a specific national average. In general, higher credit scores qualify for lower rates, and rates in the excellent tier often fall in the single digits. However, exact rates depend on the lender, overall credit profile, vehicle, and current market conditions.

• Excellent credit (typically 720+): Usually the lowest rates, but no specific CFPB figure.
• Good credit (typically 660-719): Higher than excellent, but still often competitive.
• Fair credit (typically 601-659): Rates may be elevated, but still better than subprime.
• Poor credit (typically 600 and below): CFPB reports rates roughly 9% to 20% depending on lender.
• Your precise rate depends on more than your credit score.

Sources: Consumer Financial Protection Bureau

How Loan Terms Affect Your Costs

Loan term length affects your monthly payment and total interest. A longer term lowers your monthly payment but increases the total interest you pay over the life of the loan.

The same loan amount and APR stretched to 72 months cuts the monthly payment to $320 but raises total interest to $3,024.

Lenders may quote different rates for different terms, but the CFPB does not publish a table of average used car loan rates by term. The trade-off is consistent: shorter terms mean lower total interest costs, while longer terms mean lower monthly payments but higher overall interest. A longer term also increases your risk of negative equity—owing more than your vehicle is worth—if the car depreciates faster than the loan balance declines.

Compare offers based on APR rather than just the monthly payment to see the true cost.

• 36-month term: Higher monthly payment, lower total interest.
• 48-month term: A middle ground between monthly cost and total interest.
• 60-month term: Lower monthly payment than 36 or 48 months, but more total interest.
• 72-month term: Even lower monthly payment, highest total interest, and more negative equity risk.

Sources: Consumer Financial Protection Bureau

New vs. Used Car Financing

Used cars generally cost less than new ones, which shows up in typical loan amounts. In 2022, the average new auto loan was roughly $40,000, while the average used auto loan was more than $28,000—about 15% and 35% higher, respectively, than pre-pandemic levels. The average used vehicle price was $28,219 in July 2022, near a record high, while the average new vehicle price reached a record $48,182 that month.

While the CFPB does not provide a direct comparison of interest rates between new and used vehicles, used car loans tend to be smaller because the cars are less expensive. That can affect the rates and terms lenders offer.

Your credit profile and the lender you choose will likely have a bigger impact on your rate than the new/used distinction. Focus on comparing annual percentage rates (APRs), which include fees, rather than just monthly payments.

Sources: Consumer Financial Protection Bureau

Sources and Data Notes

The information on this page comes from the Consumer Financial Protection Bureau (CFPB), a U.S. government agency. The CFPB's research on subprime auto loan rates comes from a September 2021 report, and its loan amount and price figures are from 2022. The CFPB does not publish a real-time table of average used car loan rates by credit score or term.

These data are provided as a general reference and may not reflect current market conditions. Rates change frequently, so use this information to understand the factors that influence rates rather than as a current quote.

For a personalized rate, contact lenders directly. The CFPB also notes that rates offered through dealers are often higher because they include extra interest to compensate the dealer for arranging financing.

• CFPB subprime rate range: 9% to 20% (2021 data).
• CFPB average loan amount for used cars: over $28,000 (2022 data).
• The CFPB does not provide current average rates by credit tier or term.
• Actual rates vary by lender, credit score, vehicle, and market.

Sources: Consumer Financial Protection Bureau

How to Get a Personalized Rate Without Hurting Your Credit

Shopping for an auto loan can be done in a credit-friendly way. According to the CFPB, getting multiple rate quotes can have a small negative effect on your credit scores, but for most people, the savings from shopping outweigh that impact. You can minimize the impact by getting all your quotes within a 14 to 45 day window, which allows scoring models to treat them as a single inquiry.

When comparing offers, focus on the APR—the annual percentage rate—which reflects both the interest rate and any fees. The federal Truth in Lending Act requires lenders to give you key disclosures, including the APR, before you are legally obligated on the loan.

Interest rates are negotiable. If you receive a lower offer from one lender, you can ask another lender to match it. Consider checking rates at banks and credit unions separately from dealer-arranged financing, since dealer rates often include extra markup.

If you have strong credit, you may qualify for special promotional rates from lenders associated with car manufacturers, but those loans are usually only available through auto dealers.

• Gather quotes within a 14-to-45-day window to limit credit score impact.
• Compare APRs, not just monthly payments.
• Negotiate your rate by mentioning competing offers.
• Check credit unions, banks, and online lenders.
• Dealer-arranged financing often carries a higher rate to compensate the dealer.

Sources: Consumer Financial Protection Bureau