Why Is APR Important for a Car Loan?

When considering auto loan rates, taking note of the annual percentage rate (APR) is crucial. It reflects the average cost of financing, including interest and fees, on your car loan each year.

The fees for your auto loan aren’t included in the interest rate but are part of the APR. As a result, the APR gives a clearer picture of the total cost of your loan each year.

Your APR can vary widely and is mostly determined by your credit score. That is why you should check your credit score, consider getting a credit report, and pay attention to it before you begin the loan application process. If your credit score is low, you may pay more interest.

As of February 2025, with excellent credit (750+), your car loan APR could be 9.07% for a new car and 9.32% for a used car. For good credit (700-749), expect rates around 10.35% for new cars and 10.60% for used cars. With fair credit (600-699), the average APR is 14.89% for new cars and 15.14% for used cars.

For poor credit (451-599), rates could reach 21.19% for new cars and 21.44% for used cars. Deep subprime rates (450 or lower) are often unavailable due to high risk.

While auto loan rates may vary dramatically over time, as of February 2025, Bank of America’s best rates are 5.79% APR for new cars and 5.99% for used cars. Chase offers competitive rates too, but exact figures depend on your credit and loan details. Check with the lender for personalized rates.

Apart from APRs, look beyond the monthly payment and consider the total amount you’ll pay over the life of the loan. While lower monthly payments might seem appealing, longer loan terms can result in paying more interest in the long run.

Tip: You can use a handy car loan calculator to find the best auto loan rates from a vast range of lenders in the U.S.