Auto loan rates already have been low and could go even lower thanks to the Fed's extreme rate cuts.

The road map for auto loan rates

Beautiful stylish young girl travels by car, with a hat and with a card in her hands, summer travel, freedom, transport for rent, new impressions and adventure, freedom and youth
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Rates on auto loans ride up and down hills, just like other interest rates. In February, the average APR — annual percentage rate — on a new car loan was 5.6%, according to, down from the average 6.3% that borrowers were getting in February 2019.

"They're definitely getting better interest rates than if they tried shopping at this time just a year ago," says Jessica Caldwell, executive director of insights at Edmunds.

Average auto loan rates have stayed below 6% for eight straight months, Edmunds says.

Some lenders may see room to give consumers even better deals now that the Fed had brought its benchmark interest rate back down to an all-time low of between 0% and 0.25%. Still, you have to shop around to find the best rates on car loans, says LendingTree's Kapfidze.

"With the rapid moves in rates right now, not every lender is adjusting their interest rate offers to the same extent," he says.

But in just a few minutes online, you can easily compare auto loans from multiple lenders and find your lowest possible rate.

How to score the lowest car loan rate

Car Loan.
Billion Photos / Shutterstock

An auto loan calculator shows how finding a lower interest rate can save you money over time.

A $20,000 vehicle financed for 48 months at 6% has a monthly payment of $433 and will cost $2,347 in total interest during the life of the loan. At 5%, you'd pay about $425 per month and $1,944 in total interest — over $400 less.

Auto loan rates are determined by a number of factors, including your credit score. If you don't know your credit score, you can check it for free.

In late 2019, the average credit score for a new car loan was 719, according to data from the credit bureau Experian, and the average score for a loan to buy a used vehicle was 661.

Credit scores for used car loans have jumped from four years ago, when the average was 649.

You'll generally find the largest number of lenders willing to approve your auto loan if you have good to excellent credit, meaning a credit score between 670 and 850, Experian says. With fair or poor credit (a credit score of 669 or lower), your borrowing options will be more limited.

Your loan term also plays a role in your interest rate. With a 48-month (four-year) loan, you'll get a lower rate than with a 60-month (five-year) loan. The higher rates for longer-term loans are just one of many reasons to avoid 84-month auto loans, which are becoming more popular.

But remember that while a shorter term will cut your interest costs, your monthly payment will be higher.

Comparing interest rates is important when you're looking for the auto loan that's most ideal for you, but you also need to consider terms and monthly payments.

The most affordable loan for your budget might have a slightly higher-than-average rate but a longer term and a smaller monthly payment.

About the Author

Doug Whiteman

Doug Whiteman


Doug Whiteman is the editor-in-chief of MoneyWise. He has been quoted by The Wall Street Journal, USA Today and and has been interviewed on Fox Business, CBS Radio and the syndicated TV show "First Business."

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