A good auto loan rate depends on your circumstances and the vehicle. In December 2025, the average new car loan rate was 6.90% for new cars and 10.80% for used cars, according to Edmunds. Your credit score impacts whether you qualify for the best advertised auto loan rates. If you have a low credit score, you’re more likely to have a high rate.

Thanks to its latest decision on Wednesday – its final one for 2025 – the Federal Reserve has now reduced its key overnight lending rate by 1.75 percentage points since it began its rate-cutting cycle in September 2024.

“Cars have become way more expensive, and there are certain parts of our economy where salaries have not kept pace,” Sanjiv Yajnik, president of financial services at Capital One, told Auto Finance News when asked about 2025 conditions.

The average car loan interest rate is 6.35% for new cars and 11.62% for used cars, according to Experian's State of the Automotive Finance Market report from the fourth quarter (Q4) of 2024. If you're thinking about buying a car in the near future ...

Learn how to compare auto refinance loans to find your best option.

Affordability in America increasingly comes down to one institution, the Federal Reserve, whose decisions ripple through nearly every household budget.