Used-car loan rates ranged from 6.29 to 21.62 percent depending on credit history in Experian’s second quarter 2026 data. Here is how lenders set the rate and what the spread can cost.
Quick summary
- Experian’s second quarter 2026 data shows used-car loan rates ranging from 6.29 percent to 21.62 percent depending on credit history, against an overall used-car average of 11.19 percent.
- A published example of a $30,000, 60-month new-car loan found that excellent credit cost about $170 less per month and more than $10,000 less in total interest than bad credit.
- A Consumer Financial Protection Bureau study found subprime borrowers paying rates near 10 percent at banks, while finance companies and buy-here-pay-here lenders charged 15 to 20 percent.
- Most lenders offer prequalification or preapproval, and several auto loan applications within a 14-day window should affect your score no more than a single application would.
A lower credit score does more than change whether a car lender says yes. It changes the price of the loan itself, through a higher interest rate, and that price shows up in every monthly payment for years. Using published rate data and worked examples from regulators and market researchers, this breakdown shows how the cost changes across the credit range and where the extra dollars actually go.
How Lenders Set Car Loan Rates by Credit Score
Car financing typically takes the form of an installment loan: the borrower pays a fixed amount each month over a term that frequently runs three to seven years. Because the vehicle secures the debt, a borrower who cannot keep up can face repossession, which lets the lender recover part of what it is owed.
Among the factors that shape your rate, your credit score weighs heavily, because it gives the lender a way to estimate the odds that you will repay what you borrow. In broad terms, a stronger score points toward a lower rate. The type of vehicle matters too: used-car loan rates are usually higher than new-car rates. Lenders also weigh your income and broader credit history, so two borrowers with the same score can still receive different offers.
Consumers with subprime scores, meaning scores significantly lower than average, are especially likely to need a loan to buy a vehicle, and they pay the highest rates of any group.
One more term worth defining here: APR, or annual percentage rate, is the yearly cost of borrowing expressed as a percentage. The APR is the number to compare across offers.
What Borrowers Are Paying, in Averages
Experian’s State of the Automotive Finance Market report, which uses the VantageScore credit scoring model, tracks average auto loan rates by credit range. For the second quarter of 2026, it reported an average new-car loan rate of 6.35 percent, with an average monthly payment of $765, and an average used-car rate of 11.19 percent, with an average payment of $542.
The spread by credit history is where the cost shows up:
| Measure | Rate, second quarter 2026 |
|---|---|
| New-car average, all borrowers | 6.35% |
| Used-car average, all borrowers | 11.19% |
| New-car average, excellent credit | 4.41% |
| New-car average, poor credit | 16.11% |
| Used-car range, from best to weakest credit | 6.29% to 21.62% |
The same dataset puts the lowest rates within reach of borrowers scoring above 780, while those below 501 tend to see the steepest. Our guide to what counts as a good credit score explains the ranges lenders generally work with.
Worth knowing: These figures are market averages, not offers. Your own rate depends on your credit history, income, the lender, the loan term, the vehicle and your down payment, so treat the table as a benchmark rather than a quote.
What the Rate Difference Costs in Dollars
The published spread is wide enough that the same car could carry very different bills depending on the borrower. One worked example, based on a $30,000 new-car loan with a 60-month term, calculated that a borrower with excellent credit would pay around $170 less per month than a borrower with bad credit, and would save more than $10,000 in interest over the life of the loan.
Smaller rate differences compound too. Trimming an interest rate by even a fraction of a percentage point can save hundreds of dollars over the life of a loan, which is why it pays to compare offers before signing.
The cost also scales with the loan itself. The average used auto loan is more than $28,000, roughly 35 percent above pre-pandemic levels, and larger loans give each percentage point of interest more weight. Loan terms have been growing as well, since longer repayment stretches a bigger loan into payments that look affordable, and that extends the period over which interest accrues.
A narrower example from the Consumer Financial Protection Bureau shows what a moderate rate cut is worth. For a typical subprime borrower, the bureau estimated a rate of about 9 percent at a bank versus 13 percent at a small buy-here-pay-here lender, and calculated that reducing the rate from 13 to 9 percent would save around $900 over the life of the loan.
Two things make these differences hard to sidestep. First, for many households a car is the only practical way to get to work, so the payment cannot simply be skipped. Second, the payment arrives every month for years, so a higher rate keeps costing long after the car leaves the lot.
Where the Rate Comes From: Lender Type and Dealer Markup
Not all lenders charge the same borrowers the same rates. In a Consumer Financial Protection Bureau study of subprime auto lending, banks charged average rates of roughly 10 percent, while finance companies and buy-here-pay-here dealerships (dealers that finance the vehicles they sell themselves) charged 15 to 20 percent. The study also estimated that a typical borrower with a credit score of 560 or above could expect a rate near 9 percent from a bank versus 13 percent from a smaller dealer-financed lender, and that the lower of the two rates would save that borrower about $900 over the life of the loan.
Higher-rate lender types also saw more loans go bad. Within three years, the share of subprime loans falling 60 or more days behind on payments ran near 15 percent at banks, against 25 to 40 percent at finance companies and dealer-financed lenders. Even so, the study’s statistical analysis could not attribute the rate gaps to default risk alone.
How you shop matters as much as where. Most car loans are arranged through the dealership rather than directly with a lender, an arrangement known as indirect financing. The dealer passes your information to one or more lenders, then may add a markup: the gap between the rate the lender agreed to and the rate you actually pay. Lenders often cap the markup, for example at 2.5 percent, but within that range the rate can be negotiated. The Federal Trade Commission cautions that rates arranged at the dealership can carry markups and suggests comparing offers from banks, credit unions and other finance companies first. It also points out that the Equal Credit Opportunity Act bars lenders from treating applicants differently because of traits such as race, national origin or age.
Down Payments, Loan-to-Value and Tighter Terms
Down payments affect the cost of a low score in a less visible way. Lenders often require one before making a loan, and the size of a borrower’s down payment is among the factors that can explain why rates differ across lender types.
Lenders look at loan-to-value ratio, or LTV, which compares the loan amount to the value of the car. A large down payment lowers the LTV, which reduces what the lender loses if it has to repossess and resell the vehicle. When car prices rise quickly, as they have, lenders watch LTV closely, and the Consumer Financial Protection Bureau has raised concerns that today’s high prices could give lenders more reason to move on repossession sooner than they once did.
The practical effect for borrowers with weaker credit is that lenders may ask for more money down, and rules vary by lender and state. A bigger down payment also shrinks the loan itself, which lowers the monthly payment and reduces the total interest paid over the term.
How Rate Shopping Within a Short Window Protects Your Score
Shopping multiple lenders means multiple applications, which sounds like a credit score problem. It does not have to be. Most lenders provide preapproval or prequalification steps that show estimated rates first, and when several auto loan applications fall within a 14-day window, the effect on your score should be no greater than a single application’s. Our guide to hard vs. soft credit inquiries explains which checks affect your score and which do not.
Shopping also gives you a benchmark. If an offer does not line up with published averages for your credit range, that is a sign to keep looking. A common approach is to gather quotes from three or more lenders before choosing one, and to hold the dealership’s offer up against those.
Keeping your overall debt load manageable matters here too, since lenders weigh income alongside credit. Our guide to debt-to-income ratio explains how lenders measure it.
Trade-offs: Waiting to Apply vs. Buying With a Lower Score
Improving your score before applying can move you into a lower rate tier, and the examples above show what that is worth in dollars. But waiting has its own costs, and they are not small. Used car and truck prices, as measured by the consumer price index, climbed 40 percent from January 2021 onward, while new car prices climbed 12 percent. Larger loans and longer terms have followed, and the Consumer Financial Protection Bureau anticipates that bigger car loans will strain some household budgets well into the coming decade.
So the choice is between two costs rather than a cost and a free option:
- Buying now with a lower score means a higher rate, a higher monthly payment and more total interest, plus possibly a larger down payment requirement.
- Waiting to improve your score means paying for transportation some other way in the meantime, with no guarantee that car prices stay where they are.
Some borrowers split the difference: borrowing less, putting more down or choosing a shorter term, which reduces total interest even though the monthly payment rises. Auto lending, at more than $1.4 trillion outstanding, ranks third among American consumer credit markets, behind mortgages and student loans, so the terms of this decision are worth getting right. For a decision about your own loan, the published averages and your own prequalification offers are the best evidence to compare.
Related guides
- What Counts as a Good Credit Score? Ranges and What They Mean: Where your score falls in the ranges lenders use, and what each range generally signals.
- Hard vs. Soft Credit Inquiries: Which Ones Affect Your Score: Why rate shopping is treated differently from other credit checks, and how to shop without dinging your score.
- Debt-to-Income Ratio: How Lenders Measure Your Debt Load: How the new car payment fits into the numbers lenders review alongside your score.
Reader questions
Q: How much more does a low credit score cost on a car loan?
A: There is no single number, because the cost depends on the loan size, the term and the rate. The published spread is wide: used-car rates ranged from 6.29 percent to 21.62 percent by credit history in Experian’s second quarter 2026 data. One worked example of a $30,000, 60-month new-car loan put the cost of bad credit at about $170 more per month and more than $10,000 in extra interest.
Q: Why are used-car loan rates higher than new-car rates?
A: Published averages show used-car rates running higher than new-car rates, partly because used vehicles carry different lender risk. In Experian’s second quarter 2026 data, the overall used-car average was 11.19 percent versus 6.35 percent for new cars.
Q: Does getting quotes from several auto lenders hurt my credit?
A: Most lenders offer a preapproval or prequalification process that shows estimated rates first. When several auto loan applications fall within a 14-day window, the effect on your score should be no greater than a single application’s.
Q: Can I negotiate the interest rate on a dealer-arranged loan?
A: Often, yes. Most auto loans are arranged at the dealership, and within any cap the lender places on the markup, the rate can be negotiated. The Federal Trade Commission advises comparing offers from banks, credit unions and other finance companies as well.
This article is general information, not financial or legal advice. Scoring models, lender policies and laws change, and state rules vary. Check official sources such as the Consumer Financial Protection Bureau and the Federal Trade Commission, and consider a nonprofit credit counselor for help with your own situation.